What are the Types of errors in accounts? Explain with imaginary examples. What is the meaning of rectification of errors and explain its advantages?
Ritesh Patel from India
Ritesh Patel, I have already explained types of errors with imaginary examples and rectification of errors, you can read it at here and here. Now, I am writing advantages of rectifications of errors in following lines
1. With rectification of errors, we can show of financial statements correctly. We can save other interested parties from mislead.
2. It will be helpful to increase our reputation. When people will deal with us, there are lots factors which affect them. One factor is our quality in every work. If we have internal audit department which is responsible for rectification of errors. It will surely increase our quality.
3. Rectification of errors will also helpful for good managerial decisions. You know that one branch of accounting is management accounting which provides useful information to management. All its raw data comes from financial accounting. If it will be incorrect, accounting information will be wrong and decision on these accounting information will also be wrong. Wrong decision will always increase the big loss of company.
4. Yesterday, my speaker is not working because there is an error in transformer. There was no solution of this. I paid Rs. 110 for buying new transformer for my speaker. After this, my speaker was OK. But thanks to accounting scientists who made good system in accounting that is called rectification of errors which decreases our cost of accounting department.