rectification of error

1. Fundamental Of Accounting
Submitted by Submitted to
Abhilash Varghese Ankit Sir
B.Com I Sem

2. RECTIFICATION OF
ERRORS

3. Trial Balance(Verifies the arithmetical accuracy)
may not Agree/tally
Because of some errors committed while
recording/Classification stage
Errors are unintentional mistakes
The trail may agree ( even after some errors)
as some does not affect the trial balance

4. Errors can be of Two Types
Errors affecting the Trial
Balance
Errors Doesn’t affecting
the Trial Balance

5. Types of Errors (Sides/Impact Point of View)
Single Sided Errors Double sided Errors
Error with only one Errors with both the
Side(Dr/Cr) of Entry sides
Affect Trial Balance Do not affect
Trial Balance

6. Transaction in contravention of accounting
principles
Error in recognizing Capital/Revenue
Transactions
Does not affect the Trial Balance

7. Not considering a transaction
Full Omission Partial Omission
Both Aspects(Dr/Cr) Entry not posted
During Recording During
Posting
(not entered in Journal at all)
Not affect the Trial Balance Affect the
Trial
Balance.

8. Silly mistakes because of carelessness
Errors may relate to a wrong amount,
Correct amount in Wrong Account/Side
While Journalizing, Ledger posting , Casting, Balancing or
Carry forwarding
May/ may not affect the Trial Balance
Generally these affect Trial Balance

9. Effect of errors is cancelled
The second error compensate the impact of the
first error
Do not affect the Trial Balance

10. Rectification method depends on the Timing of
detection of an error
Before After Final Accounts
Trail Balance (in next period)
After
Trial Balance
(Before Final Accounts)

11. Double sided Errors- Rectified by a
Rectifying Journal Entry
Single Sided Errors
Suspense A/c P&LAdj. A/c
(After Tr. Bal.) (Next Period)
Narration/
Rectification statement
Without Suspense A/c
(before Tr. Bal.)

12. Pass the wrong entry
Reverse the Wrong Entry
pass the correct entry
pass the Rectification entry (comparing the
second & third Entry).

13. Rectifications done through
“ P&LAdjustment A/c/Prior Period Items A/c
(Error’s ultimate effect on P&L A/c is considered)”
Wages of ` 2,500 paid for the installation of machinery
charged to wages account(detected next year)
Rectification entry
Machinery Account Dr. 2,500
To Profit and Loss Adjustment Account 2,500