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CBSE Accountancy Class XI

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Accountancy - CBSE CLASS XI

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Rectification of Errors

Learning Objectives

  • Explain Types of Errors and their examples
  • Rectification the Errors :
  • Two sided i.e. Errors not affecting Trial Balance one sided i.e. Errors which affect Trial Balance.
  • To Explain Meaning and Utility of Suspense A/c
  • Maintain Suspense A/c.

In the previous chapter we have learnt that a Trial Balance is prepared to check the arithmatic accuracy of transactions recorded in a Journal, posting them into the ledger and balancing the ledger account. If a Trial Balance agrees, it is assumed that recording, posting etc. have been done correctly. But this is only partially correct because even if Trial Balance agrees, there may be some errors in the accounting records.

For example if a credit sale is omitted to be entered in the Sales Book, it will notaffect> the trial balance because both the Debit and the Credit aspects of this transaction are not recorded. In other words errors in the records may or may not affect Trial Balance.

Important : The errors whether affecting the Trial Balance or not must be detected and rectified.

Need of Rectification :

  1. For the preparation of correct Accounting Records.
  2. Preparation of P & L A/c with corrected figures to ascertain correct Profit or Loss.
  3. To find out the true financial position of the firm by preparing Balance Sheet with corrected figures.

(on the basic of Nature)

Type of Error with Meaning Sub-Types with Examples

I. Error of Omission

completely or partialy omitted to be recored in the books)

(a) Error of Complete Omission

Goods sold to X on Credit but not recorded in Sales Book.

*(b) Partial Ommission

Goods sold to X on Credit recorded in Sales Book but not posted to the A/c of X, thus sales A/c is credited but X is not debited creating
short debit. This error will affect Trial Balance.

II. Error of Commission

(These errors are caused due to wrong recording of transactions wrong totalling of subsidiary books or Ledger A/cs, Wrong posting and wrong carry forward)

(a) Error of Recording in the Book Of Original Entry

Goods purchased from Ravi for Rs. 450, recorded as Rs. 540, in the Purchase Book. (This error will not affect Trial Balance as same amount will be posted in both the A/cs, Purchase A/c as well as Ravi.)

*(b) Wrong Totalling of Subsidiary Book.

Example : Purchase Book has been undercast (short totalled) by Rs. 100, Purchase A/c will be debited short by Rs. 100, decreasing the debit side of Trial Balance by Rs. 100.

(c) Error in Totalling or Balancing of Ledger A/cs*

Example : Creditors A/c has been balanced short by Rs. 500, then Trial Balance will Rs. 500 short in Credit side.

(d) Error of Posting

*(i) Posting to the wrong side but correct account.
Goods sold to X for Rs. 550, entered to the credit of X's A/c instead of posting to the debit side of his account.
*(ii) Posting with wrong amount.
*(iii) Posting twice in an A/c.
(iv) Errors in posting to the wrong A/c but correct side don't affect Trial Balance.

*(e) Error in carrying forward.

Total of purchase book Rs. 2,500 is carried
forward as Rs. 2050 Creating short debit of
Rs. 450, in Purchase A/c and in turn short debit
in Trial Balance.

III. Errors of Principles.

(These errors are caused due to the violation of accounting principles i.e. allocation between Capital and Revenue Items.

(a) Treating capital items as revenue item

Example : Wages paid for the installation of a new machinery charged to Wages A/c instead of Machinery A/c.

(b) Treating Revenue Items as Capital Item

Example : Rs. 200 paid for the repairs of an old
Machinery but debited to Machinery A/c instead
of Repairs A/c.

IV. Compersation Errors

(Two or more errors committed in such a way that the net effect of these errors of the debit and credits of A/cs is nil).

Example : On July, 1st 2011 a sum of Rs. 2,000 paid to Mohit is posted as Rs. 200 to the Debit of his A/c and on July 20th, 2011 a sum of Rs. 200 paid to Sonil has been posted as Rs. 2,000 to the Debit of his A/c. Net Effect will be zero.

Important 1 :

1. Errors of Principles and compensating Errors don't affect Trial Balance.
2. Errors shown by star in the above table affect Trial Balance.



From Rectification point of view, errors are classified into the following two categories only :
Case I : Errors which don't affect the Trial Balance
Two Sided Errors
Case II : Errors which affect the Trial Balance
one Sided Errors.

Errors don't Affecting Trial Balance

(1) Errors of complete ommission.
(2) Wrong recording in the books of original entry.
(3) Complete ommission from posting to the A/cs.
(4) Errors of posting to the wrong A/c but on the correct side.
(5) Compensating errors.
(6) Errors of principle.


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CBSE Accountancy Class XI ( By Mr. Aniruddh Maheshwari ) 
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