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JAIPUR NATIONAL UNIVERSITY
Fundamental Of Accounting
Submitted by Submitted toAbhilash Varghese Ankit SirB.Com I Sem
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RECTIFICATION OF ERRORS
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Concept
Trial Balance(Verifies the arithmetical accuracy) may not Agree/tally
Because of some errors committed while recording/Classification stage
Errors are unintentional mistakes
The trail may agree ( even after some errors)as some does not affect the trial balance
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Errors can be of Two Types
Errors affecting the Trial Balance
Errors Doesn’t affecting the Trial Balance
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Types of Errors (Sides/Impact Point of View)
Single Sided Errors Double sided Errors
Error with only one Errors with both theSide(Dr/Cr) of Entry sides
Affect Trial Balance Do not affect Trial Balance
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Principal Errors
Transaction in contravention of accounting principles
Error in recognizing Capital/Revenue Transactions
Does not affect the Trial Balance
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Omission ErrorsNot considering a transaction
Full Omission Partial Omission
Both Aspects(Dr/Cr) Entry not posted
During Recording During Posting(not entered in Journal at all)Not affect the Trial Balance
Affect the Trial Balance.
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Commission Error
Silly mistakes because of carelessness
Errors may relate to a wrong amount,Correct amount in Wrong Account/Side
While Journalizing, Ledger posting , Casting, Balancing or Carry forwarding
May/ may not affect the Trial BalanceGenerally these affect Trial Balance
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Compensatory Errors
Effect of errors is cancelled
The second error compensate the impact of the first error
Do not affect the Trial Balance
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Rectification of Errors
Rectification method depends on the Timing of detection of an error
Before After Final AccountsTrail Balance (in next
period) After Trial Balance
(Before Final Accounts)
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Rectification of ErrorsDouble sided Errors- Rectified by a
Rectifying Journal Entry
Single Sided Errors
Suspense A/c P&L Adj. A/c (After Tr. Bal.) (Next Period)
Narration/Rectification statementWithout Suspense A/c(before Tr. Bal.)
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Rectification of Double Sided Error
Pass the wrong entry
Reverse the Wrong Entry
pass the correct entry
pass the Rectification entry (comparing the second & third Entry).
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Errors (Detected in next Period)
Rectifications done through “ P&L Adjustment A/c/Prior Period Items A/c
(Error’s ultimate effect on P&L A/c is considered)”
Wages of ` 2,500 paid for the installation of machinery charged to wages account(detected next year)
Rectification entryMachinery Account Dr. 2,500 To Profit and Loss Adjustment Account 2,500
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#THANK_YOU