Rectification is the process of correcting accounting mistakes. Errors occur due to ignorance of accounting rules and can be unintentional. To rectify errors, the incorrect entry is reversed and the correct entry is passed. A suspense account is created to balance entries that affect the trial balance. The account showing a short debit or excess credit is debited in the rectifying entry, while the account showing a short credit or excess debit is credited. An example shows machinery purchased for Rs. 10,000 was incorrectly debited to the purchase account instead of the machinery account. The rectifying entry debits machinery and credits purchase to correct the mistake.

1. Financial
accounting
Made by:
Gaurav palariya
BBA 1st

2. Rectification
of

3. Meaning of rectification
Mistakes are the result of activities If we
do something we make a
mistake
Errors in accounting are result of
ignorance of accounting rules (knowingly
and unknowingly)
UNDO what is wrong
Do what is correct

4. Point to be noted
for rectification
 Suspense accounts is created for those
entries which affect the trial balance
 IF the accounts which is to be rectified is
debited in the rectifying entry , suspense
account will be credited to complete the
correct entry and vice versa

5.  The accounting showing short debit
should be debited in the rectifying entry
 The accounting showing an excess
credit should be debited in the
rectifying entry
 The accounting showing the short
credit should be credited in the
rectifying entry
 The account showing an excess debit
should be credited in the rectifying
entry

6. Example: Machine purchase for Rs.10,000
has been debited to purchase A/C
Actual entry was to be passed
Entry which is actually passed
Correction that has to be made with net impact is
(Purchase of machinery wrongly debited to purchase account)
Machinery A/c Dr.10,000
To cash 10,000
Purchase A/c Dr.10,000
To cash 10,000
Machinery A/c Dr.10,000
To purchase 10,000