This document discusses rectification of accounting errors. It defines rectification and explains two types of errors: two-sided errors that don't affect the trial balance, and one-sided errors that do affect it. For two-sided errors, a rectifying journal entry is passed to correct the accounts. For one-sided errors found before closing, accounts are directly adjusted; if after, a suspense account is used along with journal entries to rectify the error and clear the suspense account. The suspense account is a temporary account used to reconcile differences in the trial balance until the actual error is found.

1. Accountancy
Class XI
N.K.Verma

2. What to learn
 Meaning of Rectification
 Types of Rectification-i.
Two sided Errors
ii. One sided Errors
 Suspense Account
 Utility of suspense Account
 Rectification through suspense account
 Disposal of suspense account

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).
We cannot use alteration of accounts as it may lead
to lack in reliability of accounts.
If a correction is seen after a gap of time any
alteration to it may lead to disturbance of all
accounting entries made after that.

4. Rectification
Rectification depends on stage when the errors are
rectified:-
 If the error is traced before posting to the Ledger, it may be
corrected by neatly crossing out the wrong figure by a single
line and writing the correct figure above the crossed figure.
Even if a wrong figure is posted in the ledger accounts, may
be corrected in the same manner.
 If an error is traced after some time it should
be corrected by passing a suitable Journal
entry, called the rectifying entry

5. Types of Rectification-
Two sided Errors (which do not affect Trial Balance)
 These errors affect two accounts together.
 Omission to pass an entry
 Wrong recording of a transaction
 Posting to the wrong account
 Errors of principle
These errors can be rectified just by passing a
Journal entry (with debit of one account and
crediting the other)
Now we will discuss the rules to be observed while
passing the entries to rectify these errors

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

7. Machinery purchased for Rs. 10,000 has been debited
to Purchases A/c
Rectifying Entry: Method one: Machinery A/c Dr. 10,000
To Purchase A/c 10,000 (For
purchase of machinery wrongly debited to Purchase A/c)
Method Two: Actual entry that was to be passed
Machinery A/c Dr. 10,000
To Cash 10,000
Entry which is actually passed
Purchases A/c Dr. 10,000
To Cash 10,000
Correction that has to be made with net impact is
Machinery A/c Dr. 10,000
To Purchase A/c 10,000 (For
purchase of machinery wrongly debited to Purchase A/c)

10. Types of Rectification- One sided Errors (which affect Trial Balance)
 These errors affect only one account
 When a subsidiary book is undercast(totalled less) or
overcast (totalled in excess)
 When posting to an account is altogether omitted
 When the posting is made on the wrong side of an account
 When the posting of a wrong amount is done
Rectification of these errors can be done in accordance
with the time of rectification i.e.
1. When the errors are located before the closing of
accounts.
2. When the errors are located after the closing of
accounts.

11. When the errors are located before the closing of accounts.
 Rectification at this stage does not required
rectification entries. Only the amount need to be
adjusted in the account just by writing the amount on
debit side or credit side of the account which is
affected by the error.
 Examples:

13. When the errors are located after the closing of accounts.
(Errors located and rectified after the closing of accounts)
 These errors are corrected by passing journal entries.
 As only one account is affected a suspense A/c is used
to complete the entries.

14. MEANING
 WHEN THE TRIAL BALANCE IS NOT TALLIED WITH
BEST EFFORTS A NEW ACCOUNT IS OPENED AND IS
NAMED AS SUSPENSE ACCOUNT.
 THIS IS DONE TO AVOID DELAY IN ACCOUNTING
PROCESS(PREPARATION OF FINAL ACCOUNTS)
 IF DEBIT SIDE OF TRIAL BALANCE EXCEEDS CREDIT
SIDE THE BALANCE IS PUT ON THE CREDIT SIDE AND
VICE VERSA.

15. DISPOSAL OF SUSPENSE ACCOUNT
Suspense account is an imaginary account.
It is used as a temporary measure
It is used to reconcile a trial balance
It ends with the location of errors.
To dispose rectification entries are passed with the help
of suspense account.

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

18. Questions on the topic

19. Wages paid to Mohan for erecting
a machine should be debited to
 A) wages A/c
 B) Machine A/c.
 C) Mohan A/c
 D) Cash A/c

20. Sale of typewriter that has been
used in the office should be
credited to
 A) Sales A/c
 B) Cash A/c
 C) Capital A/c
 D) Typewriter A/c.

21. Suspense A/c in the trial balance
will be entered in the
a) Manufacturing A/c
b) Trading A/c
c) Profit & Loss A/c
d) Balance Sheet.

22. Rs. 1500 received from Bahadur whose account was
previously written as a Bad debt should be credited to
a) Bahadur A/c
b) Bad debt recovered A/c.
c) Suspense A/c
d) Cash A/c

23. Rent paid to landlord amounting to Rs. 500 was credited
to Rent A/c with Rs. 5000. In the rectifying entry rent A/c
will be debited with
a) 5000
b) 500
c) 5500.
d) 4500

24. Purchased goods from Gopal for Rs. 3600 but recorded as Rs.
6300 to the debit of Gopal. Gopal A/c will be debited with
a) 9900
b) 2700.
c) 3600
d) 6300

25. Purchased goods from Gopal for Rs. 3600 but recorded
6300 to the debit side of Gopal. Gopal A/c will be
credited with
a) 9900.
b) 2700
c) 3600
d) 6300

26. Suspense A/c is
a) Real a/c
b) Personal a/c
c) Nominal a/c
d) Any of these.

27. Errors are
a) Undetected mistakes
b) Intentional mistakes
c) Frauds
d) Unintentional mistakes.

28. A watch purchased for Rs. 800 for the son of a partner
was debited to gen. exp. A/c with Rs. 80. in the rectifying
entry drawings a/c will be debited with
a) 880
b) 720
c) 800.
d) 80

29. The end