17. Rectification of Errors

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                                 Rectification of errors is referred to as the procedure of revising mistakes made in recording transactions. These mistakes can occur while posting entries to ledger accounts, classifying accounts, carrying balance forward, etc.

  1. Errors of Omission
  2. Errors of Commission
  3. Errors of Principal
  4. Compensating Errors

A transaction, if completely or partially omitted from being recorded in the books of account, is categorised as an Error of Omission.

Error of Complete Omission arises if a transaction is not recorded in the books of account or a transaction 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:

  1. Goods purchased on credit from Peeyush not recorded in the Purchases Book.
  2. Goods sold on credit to Rakesh not recorded in Sales Book.
  3. Furniture sold on credit to Mahesh recorded in Journal proper but not posted.

          Errors of Partial Omission are an error where a part of transaction and not the complete transaction is omitted to be recorded. Such errors result in the Trial Balance not agreeing. Examples of Errors of Partial Omission

  1. Credit sale of goods to Raj recorded in Sales Book but not posted in Raj’s Account.
  2. Omission in carrying forward the total from one page to the other.
  3. Omission to balance an Account.

Errors of Commission are those errors which arise due to wrong recording wrong posting, wrong carrying forward, wrong casting of subsidiary books, wrong balancing, etc.

Errors of Commission may be of following types:

1.Error of Recording – This error arises when any transaction is incorrectly recorded in the books of original 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.

2.Error of Costing – 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

3.Error in Carrying Forward – This error arises when a mistake is committed in carrying forward a total of one page to the next page. This error affects the Trial Balance.

Example: Total of Purchases Book is carried forward as 10,000 instead of 1,000.

4′Error of Posting – This error arises when transaction recorded in the books of original entry is incorrectly transferred or posted in the Ledger.

Example: Posting total of the Sales Book in the Purchases Account instead of the Sales Account.

For example;

  1. Treating revenue expense as a capital expense.

Example: Repair expanses of machinery debited to Machinery Account.

  1. Treating capital expense as a revenue expense.

Example:

  1. Commission paid for purchase of land is debited to Commission Account instead of Land Account.
  2. Furniture purchased on credit wrongly recorded in Purchases Book Instead of Journal Proper. It means that Purchases Account has been wrongly debited instead of Furniture Account.

Errors are of following two categories:

  1. Errors affecting the Trial Balance or One-sided Errors;
  2. Errors not affecting the Trial Balance or Two-sided Errors.

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