Ch 8 Rectification of Error P a g e | 8.

Rectification of Error
Learning Objectives

 Meaning of Error
 Types of Error with example
 Steps to Locate Error
 Rectification of Errors
 Before preparing Trial Balance
 After Preparing Trial Balance but before preparing Profit and Loss Account
 After Preparing Profit and Loss Account (Subsequent Period)

Practical Questions

Recording Errors
Q 1: Correct the following errors:
a. Goods received back from Ali, a customer, Rs. 150 have not been entered in the Returns
inwards Book at all.
b. Furniture for office purchased from Ravi Rs. 800 has been entered in the purchases book.
c. A purchase of Rs. 251 from Gopal & Co. has been entered in the purchased Book as Rs. 215.
d. Purchase returns worth Rs. 980 to Hari were not recorded in the book.
e. Rs. 3,750 paid for wages to workman for making show cases had been charged to wages
account.
f. A sale of Rs. 296 to Krishen has been entered in the sales Book as Rs. 269
g. Goods taken by proprietor Rs. 100 have not been entered in the books at all.
h. Rs. 684 being the discount allowed by one of the suppliers Mr. ‘Y’ on 25th June was omitted
to be recorded.
i. A credit sale of Rs. 1,500 was recorded in purchased Day book and a credit purchase of Rs.
2,000 was entered in sales Day Book.
j. Sales Return of Rs. 5,000 to Jyothy was not entered in financial account, though it was duly
taken in the stock book.

Posting Errors
Q 2: Rectify the following errors:
(i) A sale of Rs. 159 to Kohli has been debited to his account as Rs. 195.
(ii) A purchase of Rs. 158 from Soni has been debited to his account as Rs. 185.
(iii) Rs. 1,150 received from Radhey was debited to his account.
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(iv) Rs. 100 received from Raghu has been debited to Sunder.
(v) Repairs to Motor van Rs. 374 have been debited to motor van Account as Rs.174
(vi) A sum of Rs. 1,000 written off machinery has not been posted to Depreciation Account.
(vii) Rs. 1,500 worth furniture purchased on credit was debited to purchases Account.
(viii) Rs. 130 received from Krishen against a debt previously written off has been credited to
his account.
(ix) A sporting gun costing Rs. 300 purchased for the proprietor has been debited to General
Expenses A/c.
(x) The total of the Return Outwards Book Rs. 210 has not been posted in the ledger. Supplier’s
account has been correctly debited.
(xi) Old furniture sold for Rs. 540 has been entered in the Sales Account as Rs. 450.
Totaling / Casting Errors

Q 3: Correct the following errors:

(a) The total of the Purchase Book is Rs. 1,000 short.
(b) The total of the Purchase Book is over casted by Rs. 1,000.
(c) The total of the Discount Column of the cash Book (cr.) is Rs. 10 short.
(d) Discount column of the receipts side of the cash Book was wrongly added as Rs. 140
instead of Rs. 120.
(e) Return inwards book for December was short totaled by Rs. 100.
(f) Returns Outward Book under casts by Rs. 909 on 28th June.
(g) The sales book was under-casted by Rs. 50.

Q 4: There is difference in the Trial Balance of Shri Om. Subsequently the following errors
were found to have been committed. Pass Journal entries to rectify them and ascertain the
difference in the Trial Balance.
A. A sale of Rs. 2,000 to Shanti & Co. was credited to their account.
B. While posting the account of Ghosh from the sales Book the sale of Rs. 360 has been
credited to him.
C. A sale of Rs. 10,000 had been passed thought the purchase day book, the customer’s
account had however been correctly debited
D. Purchased of Rs. 6,710 had been posted to the debit of the creditors accounts as Rs. 6,710.
Creditor was Paras & Co.
E. Goods worth Rs.1,000 were sent on sale or return basis to a customer and entered in the
Sales Book. At the close of the year, the customer still had the option to return the goods.
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The sale price was 25% above cost.

Q 5: The Trial Balance of Green & Co. as on 30th June 2001 shows a difference of Rs. 8,323.
The debit side being in excess of the credit side, this difference was placed in “Suspense A/c”
while closing the books. The following errors were subsequently noticed:
A. Discount of Rs. 25 allowed by Anand has not been entered in the cash book although
debited to him correctly in the ledger.
B. Repairs to plant and Machinery amounting to Rs. 1,100 were debited to plant and Machinery
Account on 9th June.
C. Advance of Rs. 1,001 given to one of the suppliers Mr. ‘X’ on 20th May was entered correctly
in the cash Book but was posted in his account on the credit side.
D. A cheque for Rs. 929 deposited in the bank on 29th May was wrongly entered in Cash Book
as Rs. 9229 though the correct amount was posted in the account of customer.
E. A purchase of Rs. 400 from Saran has been entered to the sales Book. However, Saran’s
has been correctly credited.
Required: Rectify the error and prepare Suspense Account.

Q 6: Rectify the following errors by way of journal Entries and work out their effect on the
profit and Loss Account of the business
1. Rs. 5,810 being cash paid to Hira Chand was debited to Ram Chand as Rs. 5,010
2. A purchase made for Rs. 500 was posted to the purchases Account as Rs. 50.
3. Wages paid for erection of second-hand Machinery purchased amounting to Rs. 700 was
debited to wages Account.

Q 7: An accountant could not tally Trial balance. The difference was temporarily placed to
suspense Account for preparing the final accounts
The following errors were later discovered:
a. A purchase from Niranjan of Rs. 92 though correctly entered in the purchase Book, was
wrongly debited to his personal account.
b. Entertainment expenses Rs. 95, though entered in the Cash Book not posted in the ledger.
c. Commission of Rs. 25 paid was posted twice once to discount and once to commission
account.
d. A sale of Rs. 139 to Raman Lal though correctly entered in Sales Book was posted wrongly
to his account as Rs. 193.
You are required to -
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I. Pass the necessary rectifying entries

II. Prepare suspense Account and
III. State the effect of each of the rectifications on the profit.
IV. What would be the correct profit if the profit originally arrived at was Rs. 10,000?

Q 8: The trial balance of Anil Traders did not agree. The difference was put in the suspense
Account and the following trial balance was drafted:
Trial Balance as on 31st march 2011
Particular Dr. Cr.
Capital Account 45,000
Drawing Account 6,500
Purchases Account 92,750
Sales Account 1,07,200
Salaries and wages Account 12,250
Furniture and Fittings Account 17,500
Debtors Account 30,250
Creditors Account 21,250
Stationery Account 1,250
Cash at Bank 5,700
Cash in Hand 2,300
Bills Receivable Account 15,750
Bills payable Account 9,000
Rent and Rates Account 3,200
Suspense account 5,000
1,87,450 1,87,450
On scrutiny the following errors were subsequently detected:
(a) Goods drawn by Mr. Anil the proprietor for personal consumption of Rs. 1,500 have not at
all been recorded.
(b) Goods Sold to Ram for Rs. 1,250 on credit was debited to Rahim account for Rs. 250 only.
(c) Wages paid for fittings Rs. 500 was debited to salaries and wages account
(d) Goods purchased from Atul for Rs.2,500 On Credit was wrongly debited to his account.
You are required to pass the rectification entries and redraft the trial balance.
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Part 2: Short Answer

Q 1: [Nov 1999, 5 Marks] Briefly explain the difference between Errors of Principle and Errors
of Omission.

Q 2: [Nov 1997, 5 Marks] Briefly explain 'Suspense Account' appearing in Trial Balance.

Q 3: [May 2002, 5 Marks] State which type of errors are not disclosed by the agreement of
the trial Balance.

Part 3: True / False

State with reasons, whether the following statements are True or False:
(a) [May 2018; 2 Marks] If the effect of errors committed cancel out, the errors will be called
compensating errors and the trial balance will disagree.
(b) [May 2019, 2 Marks] If the amount is posted in the wrong account or it is written on the
wrong side of the account, it is called error of principle.
(c) [Nov 1994; 2 Marks] Rectification of errors will not necessarily balance a Trial Balances.
(d) [Nov 1995, 2 Marks] Any type of error affects the agreement of Trial Balance.
(e) [May 1996, Nov 2020, 2 Marks] Purchase of officer furniture has been debited to general
expenses account. It is a compensating error.
(f) [Nov 1996, 2 Marks] Error of carry forward of totals of Purchase Journal affects two
accounts.
(g) [May 1999, 2 Marks] If the amount is posted in the wrong account or it is written on the
wrong side of an account it is called error of omission.
(h) [May 2001, 2 Marks] Compensating errors do not disturb agreement of Trial Balance.
(i) [May 2002, 2 Marks] Errors of complete omission will be located, if a Trial Balance is
prepared.
(j) [Nov 2004, 2 Marks] Under or over-casting of a subsidiary book is an example of error
of commission.
(k) [Nov 2004, 2 Marks] Rectifying errors in subsequent accounting period always affects
the profit or loss of that period.
(l) [May 2005, 2 Marks] Rectification of errors are necessary to tally the trial balance.
(m) [Nov 2006, 2 Marks] ‘Rent of Proprietor’s residence debited to rent account’; This error
will not affect the trial balance.