Accountants prepare trial balance to check the correctness connected with accounts. If total connected with debit balances does not agree with the overall of credit account balances

1. Rectification Associated with Accounting Errors
Accountantsprepare trial balance tocheckthe correctnessconnectedwithaccounts.If total connected
withdebitbalancesdoesnotagree withthe overall of creditaccountbalances,itissome sortof clear-
cut indicationthatcertainerrorshave beencommittedwhile takingthe transactionsinside booksof
initial entryoradditional books.Itisthe utmostdutyto uncoverthese errorsand rectifythem, onlythen
we oughtto proceedforplanningfinal accounts.We alsounderstandthatall typesof errors usuallyare
not revealedbytryoutbalance asa lotof the errorsdo not effectthe overall of trial stability.Sothese
are notlocatedthroughtrial balance.Anaccountant reallyshouldinvesthisenergytouncoverboth
typesconnectedwitherrorsandcorrect thembefore planningtrading,profitandlossaccountand
balance sheet.Because if these are readybefore rectificationthese won'tgive usthe bestresultand
revenue andlossunveiledbythem,shall notare the actual profitormaybe loss.All errorsconnected
withaccountingprocedure maybe classifiedasuses:1. Errors connectedwithPrinciple Whenadeal is
recordedresistanttothe fundamental principlesconnectedwithaccounting,itcanbe an error of
theory.Forexample,inthe eventthatrevenueexpenditure isactuallytreatedascapital expenditureor
vice versa.onlytwo.Clerical ErrorsThese errorscan easilyagainbe sub-dividedasfollows:(i) Errors
connectedwithomissionWhenadeal iseitherwhollyorpartiallynotrecordedinside books,itcanbe an
error of omission.Itmightbe withregardto helpomissiontokeyinatransactioninside booksof initial
entryor intendedforomissiontoposta transactionfromyour booksof original entrytowardsthe
account concernedinside ledger.(ii)Problemsof commissionAnytime anentryisactuallyincorrectly
recordedeitherwhollyorpartially-incorrectplacing,calculation,castingormaybe balancing.Some in
the errors of paymenteffectthe tryoutbalance whereasotherswill not.Errorseffectingthistrial
balance maybe revealedbypreparingatrial balance.(iii) HavingtopayerrorsSometimesan
malfunctioniscounter-balancedbyanothererrorsothat it isn'tdisclosedbythistrial balance.Such
errorsare calledcompensatingerrors.Fromthe standpointof rectificationinthe errors,these maybe
dividedintoacouple groups:(a) Problemsaffectingone accountsonly,and
• 2. (b) Errors affectingtwoormore accounts.Errors impactingonone account Errors which
affectmaybe: (a) Castingblunders;(b) errorconnectedwithposting;(c) take forward;(d) balancing;
and (e) omissionthroughtrial balance.Sucherrorsshould,firstly,be locatedandrectified.These are
rectifiedeitherthroughjournal entryorbygivinganexplanatorynote inside accountconcerned.
RectificationLevelsof correctionconnectedwithaccountingerrorsAll typesof errorsinaccountsmay
be rectifiedata couple stages:(i) before the preparationof afinal accounts;and(ii) following
preparationof last accounts.Errors rectifiedfromthe accountingperiodThe propertechnique of
correctionof an oversightistogo journal entryso that itmodifiesthe mistakethatwascommittedand
inadditiongiveseffecttowardsthe entrythatreallyshouldhave been passed.Butwhileerrorsare
beingrectifiedbeforethispreparationof lastaccounts,incertaincasesthe correctioncan't be done
throughjournal entrybecause the errorshave beensuch.Normally,the processof rectification,inthe
eventthatbeingdone,before the preparationof final accountsisreallyasfollows:(a) Correction
connectedwitherrorsaffectingone side of 1account Sucherrors do notletthe trial balance agree while
theyeffectonlyone side of 1account so these can't be corrected throughjournal entry,if correctionis
neededbeforethe gettingreadyof final accounts.Sorequiredamountisputon debitorcreditside in
the concernedaccount,because case maybe.Asan example:(i) Salese-bookundercastby Rs. 500 in

2. the monthof january.The error shouldbe onlyinsalesaccounts,inorderto fix the salesaccounts,we
shouldrecordaroundthe creditside connectedwithsalesaccount'Bywithincastingof.salesbookfor
the monthof januaryRs. 500". I'Explanation:Since salesbookendedupbeingundercastbyRs. 500, it
meansall accountsaside fromsalesaccount tendto
• 3. be correct,onlycreditscore balance of salesaccountisa lesseramountof byRs. 500. Andso
Rs. 500 are actuallycreditedinsalesaccount.(ii) DiscountallowedtoMarshall Rs.50, not postedto
price cut account. It meansthatthe quantityof Rs.50 whichreallyshouldhave beendebited
throughoutdiscountaccounthas notbeendebited,sothe debitfacetof discountaccountcontinuesto
be reducedby a similaramount.We reallyshoulddebitRs.50 throughoutdiscountaccountrightnow,
whichwasomittedpreviouslyandthe discountaccountwill likelybe corrected.(iil)Merchandise soldto
Timeswronglydebitedthroughoutsalesaccount.Thiserrorisactuallyeffectingonlysalesaccount
because amountwhichreallyshouldhave beenpostedaroundthe creditside continuestobe wrongly
placedondebitside inthe same account.Regardingrectifyingit,we shouldputdoublethe quantityof
transactionon thiscreditside connectedwithsalesaccountbywriting"BysalestoX mistakenlydebited
previously."(iv) AmountconnectedwithRs.500 settledtoY,not debitedtohispersonal account.This
error of effectinganindividual canaccountof Y onlyandit isdebitside isactuallylessbyRs.500 as a
consequence of omissiontopostthe amountpaid.We shouldcertainlynow write onitsdebitfacet."To
cash (omittedtogetposted) Rs.500. Correctionof blundersaffectingtwosidesof twoormore accounts
As these errorsaffecttwoor more accounts,rectificationconnectedwithsucherrors,if beingdone
before the preparationof final accountscanoftenbe done througha journal gainaccessto. While
correctingthese errorsthe amountisdebitedina account/accountswhereascomparableamountis
creditedforsome otheraccount/accounts.Correctionof blundersinnextdataprocessingperiodAs
mentionedpreviously,thatitisadvisable touncoverandrectifythiserrorsbefore preparingafinal
accounts forthe year. Butin particularcaseswhensoonafterconsiderable search,the accountantfails
to locate the blundersandhe ison the go to prepare a final accounts,of the organizationforfilingthis
returnfor salestax or income tax purposes,he transfersthe quantityof difference of trial balance intoa
newlyopened'SuspenseAccount'.Yearlyaccountingperiod,asandif the errors are locatedthese
include correctedwithregardstosuspense account.Wheneveryone of the errorsare identifiedand
rectifiedthissuspenseaccountwill likelybe closedautomatically.We shouldtake intoaccounthere that
merelythose errorsthateffectthe totalsconnectedwithtrial balance maybe correctedthrough
suspense account.Those errorswhichwill noteffectthe trial balance can'tbe correctedthrough
suspense account.Asanexample,if itisavailablethatdebitfull of trial stabilitywaslessbyRs.500
because Wilson'saccounthadnot beendebitedwithRs.500, the followingrectifyingentryisneededto
be passed.Change intrial stability
• 4. Trial balance isimpactedbyonlyerrorswhichmightbe rectifiedthroughthe suspense
accounts.Therefore,inordertohelpcalculate the difference insuspenseaccountsatable will probably
be prepared.If the suspense accountsisdebitedin'thisrectificationentrythe amountwill be putonthe
debitside inthe table.Onthe opposite hand,if thissuspense accountisactuallycredited,the amount
will probablybe putonthiscreditside inthe table.Inthe conclusion,the balance iscalculatedandis
particularlyreversedinthissuspenseaccount.Whenthe creditside meets,the difference canbe puton
thisdebitside inthe suspense account.Impactof Errors connectedwithFinal Accounts1.Problems
effectingprofitandlossaccountIt isimportantto note the effectmake fishanen-orshall have goton
netprofitinthe firm.One pointtorecollecthere isinwhichonlythose accountswhichmightbe

3. transferredtotradingand profitandlossaccount at the time of preparationof lastaccounts effectthe
internetprofit.Itensuresthatonlymistakesthroughoutnominal accountsandgoodsaccountwill effect
the internetprofit.Errorinside these accountswill certainlyeitherincreaseordecrease the internet
profit.Howthiserrors or hisor herrectificationeffectthisprofit-followingrulestendtobe helpful in
knowingit:(i) If as a consequence of anerrorsome sort of nominal accountcontinuestobe givensome
debitthisprofitwill minimize orlosseswill increase,andwhenitcan be rectifiedthe profitswillincrease
and the losseswill decrease.Asanexample,machineryisoverhauledforRs.10, 000 thoughthe amount
debitedtohelpmachineryrepairsaccounts -thiserrorwill slow upthe profit.Inrectifyingentrythe
amountshall be transferredtomachineryaccountthroughmachineryrepairsaccounts,anditwill
increase the profits.(il)If asa consequence of anerror the amountisomittedfromrecordingaround
the debitside of the nominal account-itbringsaboutincrease of profitsordecrease inlosses.The
rectificationonthiserrorshall have gotreverse effect,whichsuggeststhe profitwillprobablybe
reducedandlosseswill probablybe increased.Forillustration,rentpaidtolandlordthoughthe amount
has beendebitedtoindividual accountof landlord-itwill increase the profitbecause expense onrentis
reduced.Whenthe erroris rectified,we willpostthe necessaryamountinrentaccountwhichwill
increase the costson rentso profits will possiblybe reduced.(iil) Profitwill increase orlosseswill
decrease incase a nominal accountis actuallywronglycredited.Usingthe rectificationof thiskindof
error,the profitswill certainlydecrease andlosseswill increase.Forexample, investmentswere sold
and the amountwas addedtosalesaccounts.This errorwill increase profits(orreduce losses)if the
same error isrectifiedthe amountshall be transferredfromsalesaccountstoinvestmentsaccount
causedby whichsaleswill probablybe reducedwhichcanleadto decrease inearnings(orincrease
throughoutlosses).(iv) Profitwillcertainlydecreaseorlosseswillincreaseif anaccountsis omittedfrom
postinginside creditsideof the nominal orgoodsaccount.Whena similarwill be rectifieditwill
eventuallyincreasethe profitorslowupthe losses.Forillustration,commissionreceivedisomittedto
getpostedto this
• 5. creditof paymentaccount.Thiserror will certainlydecrease profits( ormaybe increase
losses) forincome isnotcreditedtorevenue andlossaccounts.Whenthe errorwill probablybe
rectified,itwillhave reverse effectonprofitandlossforadditional incomewillprobablybe creditedto
revenue andlossaccounttherefore the profitwill enhance ( orthislosseswill decrease).If causedby
any errorthisprofitor lossesare effected,itwill have itseffectoncapital accountinadditionbecause
profitstendtobe creditedandlossesare debitedinside capital accounttherefore,the capital shallmay
alsoincrease ordecrease.Ascapital isshownaroundthe liabilitiesside connectedwithbalance sheetso
any errorthroughoutnominal accountwill certainlyeffectbalance sheetatthe same time.Sowe can
say make fishanerror in affordable account orgoodsaccount effectsrevenue andlossaccounttogether
withbalance sheet.onlytwo.ErrorseffectingstabilitysheetonlyIf anoversightiscommittedinthe real
or individualaccount,itwill certainlyeffectassets,financialobligations,debtorsorcreditorsinthe firm
and as a resultitwill have itsimpacton balance sheetalone.because theseobjectsare shown
throughoutbalance sheetmerelyandbalance publishedispreparedfollowingprofitandlossaccount
continuestobe prepared.Soif you experienceanyerrorthroughoutcashaccount, account,assetor
liabilityaccountitwill eventuallyeffectonlystabilitysheet.

4. • 6. creditof paymentaccount.Thiserror will certainlydecrease profits( ormaybe increase
losses) forincome isnotcreditedtorevenue andlossaccounts.Whenthe errorwill probablybe
rectified,itwillhave reverse effectonprofitandlossforadditional incomewillprobablybe creditedto
revenue andlossaccounttherefore the profitwill enhance ( orthislosseswill decrease).If causedby
any errorthisprofitor lossesare effected,itwill have itseffectoncapital accountinadditionbecause
profitstendtobe creditedandlossesare debitedinside capital accounttherefore,the capital shallmay
alsoincrease ordecrease.Ascapital isshownaroundthe liabilitiesside connectedwithbalance sheetso
any errorthroughoutnominal accountwill certainlyeffectbalance sheetatthe same time.Sowe can
say make fishanerror in affordable accountorgoodsaccount effectsrevenue andlossaccounttogether
withbalance sheet.onlytwo.ErrorseffectingstabilitysheetonlyIf anoversightiscommittedinthe real
or individualaccount,itwill certainlyeffectassets,financialobligations,debtorsorcreditorsinthe firm
and as a resultitwill have itsimpacton balance sheetalone.because theseobjectsare shown
throughoutbalance sheetmerelyandbalance publishedispreparedfollowingprofitandlossaccount
continuestobe prepared.Soif youexperienceanyerrorthroughoutcashaccount, account,assetor
liabilityaccountitwill eventuallyeffectonlystabilitysheet.
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