CHAPTER 17

Rectification of Errors
LEARNING OBJECTIVES
Thischapter would lenable students to understand:
Classification of Errors:Errors of Omission, Errors of
Errors Affecting the Trial Balance or One-sided Errors
Commission, Errors of Principle and Compensating Errors
J Errorssnot Affecting the Trial Balance or Two-sided Errors
1Locating Errors or Detection of Errors
Rectification of Errors:
>Before Preparation of the Trial Balance
After Preparation of the Trial Balance but before
Preparation of the Final Accounts
JSuspense Account
Trial Balance, a statement of debit and credit balances of
to check the arithmetical accuracy of books of account.
ledger accounts, is prepared
The total of the debit balances
f Trial Balance should be equal to its total of the credit
balances. This is based on
the principle that in double entry system, for every debit
there is a
credit of equal amount and vice versa. However, a matched Trial corresponding
Balance is not
aconclusive proof of the complete correctness of books of
the Trial Balance matches, some errors may still remain in
account. Even when
the accounting records.
For example, non-recording of credit purchase in the Purchases Book will not affect
the agreement of the Trial Balance because both debit as well as
credit aspects of the
purchase transact:ion are not recorded in books.

CLASSIFICATION OF ERRORS

Keepi
1.
ng in view their nature, errors can be classified into following four categories:
Errors of Omission 2. Errors of Commission
3. Errors of Principle 4. Compensating Errors
1. Errors of
A Omission
transaction,
account.,
if completely or partially omitted from being recorded in the books of
is categorised as an Error of Omission.
Error of Complete Omission arises if atransaction is not recorded in the books of
account or atransaction recorded in the General Journal (or Journal proper) is not
posted in the Ledger. Such errors do not affect the Trial Balance.
Examples of Error of Complete Omission:
) Goods purchased on credit from Vinod not recorded in the Purchases Book.
Goods sold on credit to Rakesh not recorded in Sales Book.
ui) Furniture sold on credit to Suresh recorded in Journal proper but not posted.
 Double Entry Book Keeping-CBSE XI
17.2
and not 4l
Error of Partial Omission is an error where a part of transaction
complete transaction is omitted to be recorded. Such errors result in the Trial Balance
not agreeing. Examples of Errors of Partial Omission:
Credit sale of goods to Raj recordediin Sales Book but not posted in Raj's, Account.
total from one page to the other.
i ) Omission in carrying forward the
ii) Omission to balance an Account.
2. Errors of Commission
record1ng, wrong postine
Errors of Commission are those errors which arise due to wrong
books, wrong balancing. eta
Wrong carrying forward, wrong casting of subsidiary
Errors of Commission may be of following types:
, YError of Recording
original
This error arises when any transaction is incorrectly recorded in the books of
entry. This error does not affect Trial Balance.
Example: Goods of 5,000 purchased on credit from Mohan are recorded in the
Purchases Book as 50,000.
Ai) Error of Casting
This error arises when a mistake is committed in totalling. This error affects the
Trial Balance.
Example: Purchases Book is totalled as 10,000 instead of ? 1,00,000.
. (ii))Error in Carrying Forward
This error arises when a mistake is committed in carrying forward a total of one page
to the next page. Thiserror affects the Trial Balance.
Example: Total of Purchases Book is carried forward as 10,000 instead of ? 1,000.
(iv) Error of Posting
This error arises when transaction recorded in the books of original entry is
transferred or posted in the Ledger. incorrectly
Examples: 1. Posting total of the Sales Book in the Purchases Account instead of
the Sales Account.
2. Posting total of the Sales Book 10,505 as
10.500 in the Sales Account.
Thus, Error of Posting may or may not affect the
Following table clarifies it further: agreement of Trial Balance.
Situation Account to which the Side Amount with which Whether affects the
posting was made (Debit or credit)
1 Posting was made agreement of Trial Balance
(correct) X (wrong) Yes
3 J Yes
X
4 Yes
No
6 X Yes
X
7 X
X Yes
X
X Yes
3. Errors of
When a
Principle
transaction is recorded in
as an Error of contrayention of
are placed on thePrinciple. Such errors do not affectaccounting principles, it is known
correct side but in a wrong the Trial Balance asamounts.
account.
shotionofError: 17.3

fuexample,
Treating revenue CXpense as a capital expense.
Eample: Repair expernses of machinery dehited to MachineryArrount.
Treatingcapital Cxpen5e as 3 revenue expense.
Examples
in Cornmission pa1d for purchase of land is debited to Conrmission Arrount
instead of Land Account.
b Furniture purchased oncredit wrongly recorded in Purchas Brok instead of
Journal Proper. It means that Purchases Account has been wrongly dehited
instead of Furniture Account. Capital Expenditure (i.e., purchase of furniture)
has been treated as Revenue Expenditure (ie., purchase of goods).
4Compensating Errors
(ompensating errors are thoss errors in which effect of one error is nullified by the
isst of another error,e.g., Shyarm's Account was debited with 100ins1ead of ? 1,000
while Rarm Prasad's Account was debited with Z 1,000instead of Z 100. Thus, Shyarn's
sunt which was debited by 900 less was compensated by another error in Ram
rasad's Account whose account was debited in exces5 of 900). Take another example,
Purchases Book was undercast by 2,000and Sales Return Book was overcast by the
ount. Compensating errors do not affect the Trial Balance. Such erro
ill remain in spite of the fact that the Trial Balance matches.
trrors are of following two categories:
Errors affecting the Tríal Balance or One-sided Errors; and
2Errors not affecting the Trial Balance or Two-sided Errors.
1. Errors affecting the Trial Balance or One-sided Errors are those errors which
affest only one aceount and thus, Trial Balance dGes not matcn. For example, total
of Purchases Book is posted to Purchases Account but, purchases of 50,000 is not
Psted to Rahul's Account. One-sided Errors occur in the following cases:
() Posting only one aspect of the Journal entry in the Ledger.
(i) Posting a Journal entry on the wrong side of an account.
(ui) Wrong totalling of Subsidiary Books.
(w) Posting the Corret amount in one acCount and wrong amount in the other account.
(u) Wrong totalling or balancing of aLedger Account.
(oi) Ormitting to post the totals of Subsidiary Books.
(uii) Error in carrying forward.
uLLi) Omission in writing the balance of an account in the Trial Balance.
Balance.
(ix) Writing a balance in the wrong colunn of the Trial
Balance.
() WrongTotalling of the Trial
rial Balance or Two-sided Errors are those errors