Page 187 - DCOM101_FINANCIAL_ACCOUNTING_I

Unit 14: Rectification of Errors

14.1 Rectification of Errors when Error Affects only one Account Notes
If it is so, no journal entry is required to pass, it is corrected by debiting or crediting the concerned
account.

Example: Sales book was overcasted by ` 250 (As the sales book was overcasted by ` 250),
hence sale account is to be debited by ` 250 in order to rectify the error. This error affects only one
account. Similarly, if the Purchases Day Book is undercasted by ` 100 then the error also affects
only one account and this can be corrected by debiting purchases account by ` 100. Likewise paid
` 20 as repairs were recorded ` 25 in Repairs account again the error is in one account i.e., repair
account. It may be corrected by crediting repair a/c by ` 5 i.e. the difference (` 25 - ` 20).

Steps to Locate Error
The following steps help to locate the errors. In spite of the efforts, if the difference in the
trial balance persists, a suspense account may be created and subsequently the suspense
account can be eliminated as and when the errors are located and rectification is made.

1. To see whether the total of both the columns agree or does not agree. In order to see
it, it must be again totaled.
2. It is also necessary to see whether the balances of all the accounts including cash and
bank have been properly recorded or not.
3. Difference of both the sides must be checked carefully and if possible see whether
any such item is there which is exactly of the same amount being omitted/left out. If
it is not then have half of the difference and again compare it with the amount of any
item of the same amount which is being left out or wrongly put.
4. Subsidiary books must also be checked again, so that if any error has taken place
could be rectifi ed.
5. Divide the amount of difference in the trial balance by 2 and see if any item of the
debit or credit side, equal to that amount has been posted to the opposite side.
6. Where the difference in the trial balance is divisible by 9 then the difference is likely
to be due to misplacement of figures like 12 for 21; 24 for 42;36 for 63 and so on.

7. Still, if there is any error, thorough and complete checking of all ledger accounts is
required.

14.2 Rectification of Errors when it Affects both the Accounts

If it is so, it is rectified by passing a journal entry. For example, received ` 150 from Shri Bhagwan
was credited to sales account. This error affects both the accounts i.e., (i) Shri Bhagwan A/c and
(ii) Sales a/c. Journal entry for correction would be:

S.No. Particulars L.F. ` `
1. Sales a/c Dr. 150
To Shri Bhagwan a/c 150
Error in Sales a/c and
Shri Bhagwan a/c rectifi ed

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