How to Rectify Errors

Rectification of errors in accounting is not so easy because first of all we have to find mistakes. Sometime errors may be very small and hidden from our eyes. So, it is very necessary to use a very step by step procedure for rectification of errors.

1st Step : Divide the Rectification of errors into sub parts

For easily rectification of errors, we divide rectification of errors into sub parts.

a) Errors affecting one account

All mistakes like errors of commission, errors of posting and errors of balancing affect the one account and after watching ledger of account through internal auditing system, you can find the errors and correct it without any delay.

b) Errors affecting two or more accounts

After deep review of ledger accounts and journal and subsidiary books, we can find errors which affect two accounts. Even by making trial balance, we can not find these errors. Errors of principles and errors of omission are its main example. By rectify journal entry, we can correct these errors.

2nd Step : To Fix the Stages of Rectification of Errors

a) Before making trial balance

This is the first stage in which before making trial balance, we correct all our accounting mistakes.

b) After making trial balance and before making final accounts

Before making final accounts, if you want to correct your accounting error, you have to pass such rectify entry so, that effect of mistake will be zero on final accounts.

For example

You have written less Rs. 500 in the total of sale book. This error can affect trial balance. After finding this error, we can understand that this error is affecting only sale account, so in the credit side of sale account, we have to write Rs. 500 amount by writing “By rectification of undercasting”

You must remember,

i) What should be correct entry?

ii) What is wrong entry done?

iii) To find in which account, there is mistake?

iv) What should be rectify entry

Suppose, we purchase machinery of Rs. 5000 and entered into purchase account. Now we follow above steps

i) Machinery Account Dr. 5000
To cash Account 5000

ii) Purchase account Dr. 5000
To cash account 5000

iii) Mistake in only purchase account

iv) Machinery Account Dr. 5000
To Purchase Account 5000

c) After making final accounts

If before making final accounts, auditor did not find the errors of accounting, we have to open a new account and its name is suspense account. This account shows the amount of error which did not find and this account is opened for matching our trial balance and balance sheet. Now next year, if we find where is mistake and we close our suspense account by rectification entry. For example, in the next accounting year, we find that debit side of previous trial balance’s debit side was less of Rs. 200 and same amount was transferred to suspense account. But this year, we find its reason. Reason is that we did not we did not debit the amount of sale in the debit of Ram’s account. Now this is one sided error because we had written correct amount in sale account. So we rectify this error by passing following rectification entry.

Ram Account Dr. 200

To Suspense account 200

If there are many errors, we have to open suspense account and we can close suspense account after rectification all errors. If there are still some errors which did not find, we will show closing balance of suspense account in this years trial balance.

Step 3. : Follow  Rectification of Errors  Rules



access account accountant Accounting accounting definitions accounting ebook Accounting education accounting procedure accounting process outsourcing Accounting Software advance advertising africa Amalgamation amendments announcements Annuity assets audit auditing Australia B.Com. balance sheet bank banking Bank reconciliation basic accounting BBA benefits best bill black money blog bloggers book keeping Branch Accounting - full tutorial budget Budget variance business businessman CA calculator canada capital capital budgeting career cash cash book cash flow statement Chiense children china class coaching coins college commerce commerce students company computer computer accounting conference Contact vinod kumar corporate accounting cost cost accounting cost center cost centre CPA credit credit card cs currency data Debit and credit debit cards debt debtor degree depletion depreciation documents dollar domain Downloads Dubai e-accounting earning education Education Loans email employee EPF ERP euromoney examination excel excise duty expenses facebook factor of loan fans feature fifo FII fiji finacle finance Financial financial accounting fire insurance flickr flow forensic forex formula france fraud free fun function fund GAAP GDP gdr germany gold goodwill goodwill accounting google google apps google base google buzz google calendar Google docs google finance google fusion tables google talk govt. guide health Hindi Hindi Language history holding company How to treat FBT in Tally 9 HRA ICAI ICAWI ICICI Bank IFRS income income statement Income Tax India indian railway Indonesia inflation inflation accounting infographics information inspiration insurance insurance accounting interest international Internet Introduction of Tally 9 inventory investment invoice IT Japan Job costing journal entries keyboard kindle kuwait laptop law LBT learning lease lecture ledger leducation Leverage Analysis liabilities lifo linkedin loan logical point loss loss of profit M.Com. m.phil malaysia management accounting manual accounting manufacturing account market marketing mastercard material MBA MCA media migration mobile money ms. excel ms word Multicurrency Accounting multi currency in tally 9 mutual fund national security new and sacrifice ratio news new york times new zealand NGO nonprofit-accounting North Georgia Mountains NPV NSE odbc office oman online accounting online application otcei pakistan parents pay pal pdf pie chart pie chart of income pnb podcast ppf presentation price privacy policy prize money prof. vinod kumar profit profit and loss account project management provision purchase puzzles quickbooks Quote quotes quotes of svtuition rating agency ratio analysis RBI readers real estate rectification of errors remote control reports reserves responsibility accounting retirement revenue Revenue reserves review risk rupees salary sale saudi arabia saving sbi scholarship school SEBI security service tax share Shares share trading shri lanka singapore sms social accounting society solution South Africa stock stock exchange structure student students study subsidiary company svtuition swiss bank tally Tally.ERP 9 Tally 7.2 Tally 9 tanzania tax Tax Accounting TDS teacher teaching technology test testimonial testimonials thailand tips trading trading on equity transaction trend trial balance tuition twitter UAE UGC - NET Commerce UK United Arab Emirates university usa valuation VAT Video Voucher and vouching wikipedia working capital youtube
Accounting Education: How to Rectify Errors
How to Rectify Errors
Accounting Education
Not found any posts VIEW ALL Readmore Reply Cancel reply Delete By Home PAGES POSTS View All RECOMMENDED FOR YOU LABEL ARCHIVE SEARCH ALL POSTS Not found any post match with your request Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS CONTENT IS PREMIUM Please share to unlock