Accounting Errors and its rectification

2. Introduction
• When the business transactions are recorded in the books of
accounts there remains a possibility of accounting errors. It may
be because of hastiness in writing, negligence, oversight or
incomplete knowledge of the principles of accountancy. Some
times in order to manipulate the books of accounts, errors are
committed intentionally.
• Irrespective of whether the accounting errors are committed
innocently or intentionally they cannot be rectified by erasing with
the help of an eraser. Necessary accounting effects are to be given
in accounts in order to rectify these errors. Sometimes in an error
affects two accounts, in order to rectify the same, a journal entry is
passed which is known as a rectification entry and it is recorded in
journal proper.
• Generally two principles should be taken into consideration to
rectify the accounting errors.
Undo what is wrong
Do what is correct.
• Let us understand this point with the help of an illustration.

3. Rs.1,000 received from Akash is credited in the account of
Vikash. To nullify the effect of wrong credit to Vikash’s account,
debit his account by Rs.1000. (Undo what is wrong). Give
correct effect for the omission of a credit of Rs 1,000 to Akash’s
account. (Do what is correct) Necessary rectification entry will
be written as under.
Date Particulars
L.
F.
Debit
Rs.
Credit
Rs.
Vikash’s A/c…………………………Dr.
To Akash’s A/c
(Being the rectification of Rs.1,000
received from Akash wrongly
credited to Vikash’s account.)
1,000
1,000

4. TYPES OF ACCOUNTING ERROR:
• Errors which do not affect the trial balance.
• Errors which affect the trial balance.

5. Errors which do not affect the
trial balance
• Errors of Omission
• Errors of Principle
• Errors of recording to a wrong account
• Errors committed at the time of recording in
primary books (Error of commission)
• Compensatory errors

6. Errors which affect the trial
balance
• Errors regarding posting
• Errors regarding balance of an account
• Errors in totaling the subsidiary books
• Errors committed at the time of preparing
the trial balance

8. (1) Errors of Omission
• When a transaction is totally omitted to be recorded
in the journal or the subsidiary books or the ledger,
such an error is known as an error of omission.
• E.g. Rs.4,000 received from Bhavana is left
unrecorded. By writing correct journal entry for this
transaction the above error will be rectified.
Date Particulars
L.
F.
Debit
Rs.
Credit
Rs.
Cash A/c………………..……Dr.
To Bhavana’s A/c
(Being the entry of Rs.4,000
received from Bhavana left
unrecorded.)
4,000
4,000

9. (2) Errors of Principle
When an error arises because of non-compliance of
accounting principles it is known as an error of principle.
e.g. Rs.5,000 worth furniture purchase is debited to
purchase account. Here purchase of furniture should
be debited to furniture account bu purchase account
is wrongly debited by Rs.5,000. To nullify this effect,
purchase account should be credited by Rs.5,000 and
furniture account is to be debited by Rs.5,000 Thus
rectification entry will be as under.
Date Particulars
L.
F.
Debit
Rs.
Credit
Rs.
Furniture A/c……………………Dr.
To Purchase A/c
(Being the rectification entry for
purchase of furniture wrongly debited to
Purchase account.)
5,000
5,000

10. (3) Errors of Recording to a Wrong
Account
In such type of an error, journal entry is written correctly
but while posting, instead of giving the effect to the
correct account by mistake the effect is given to some
other account. Thus by debiting or crediting a wrong
account with correct amount, on the correct side, the
trial balance remains unaffected.
e.g. Rs.1,500 received from Susmita, is creditd to
Asmita’s account. Here at the time of posting, instead of
Susmita’s account, Asmita’s account is wrongly credited.
To cancel the wrong effect, debit Asmita’s account and
give the correct effect, credit Susmita’s account. Thus,
the error will be rectified

11. Date Particulars
L.
F.
Debit
Rs.
Credit
Rs.
Asmita’s A/c……………………Dr.
To Susmita’s A/c
(Being the rectification entry for
the amount received from
Susmita’s wrongly credited to
Asmita’s account.)
1,500 1,500

12. (4) Errors of Commission
• Transaction Recorded in Correct
Book with Less Amount
• Transaction Recorded in Correct
Book with More Amount
• Transaction Recorded in Wrong
Subsidiary Books
• Transaction Recorded in Wrong
Subsidiary Book with Wrong
Amount

13. (a) Transaction Recorded in Correct
Book with Less Amount
e.g. goods of Rs.1550 sold to sujata is recorded by
mistake as Rs.1,050. In this transaction, the effect is
given less by Rs.500 (Rs.1550-Rs.1050). To rectify this
error write correct entry with the amount of difference.
Date Particulars
L.
F.
Debit
Rs.
Credit
Rs.
Sujata’s A/c……………………Dr.
To Sales A/c
(Being the rectification entry for
recording sales to Sujata by less
amount.)
500
500

14. (b) Transaction Recorded in Correct
Book with More Amount
In this case original entry will be reversed with the
amount of difference. E.g. Goods of Rs 1,500 purchased
from Mayuri is recorded by mistake as Rs.1,550. Here
as the entry is passed with more than the correct
amount, to rectify the error reverse entry will be passed
with the amount of difference Rs.50 (Rs.1550-Rs.1,500).
Date Particulars
L.
F.
Debit
Rs.
Credit
Rs.
Mayuri’s A/c…………………Dr.
To Purchase A/c
(Being the rectification entry for
the goods purchased from
Mayuri recorded with excess
amount.)
500
500

15. (c) Transaction Recorded in Wrong
Subsidiary Books
In this type of error, instead of recording the transaction
in the correct subsidiary books, it is recorded in other
subsidiary books.
e.g. Goods of Rs. 900 purchased from Akil is
recorded in sales book. Here to remove the effect of a
transaction wrongly recorded in sales book, reverse entry
will be passed as under.
Date Particulars
L.
F.
Debit
Rs.
Credit
Rs.
Sales A/c…………….………Dr.
Purchase A/c……..………….Dr.
To Akil A/c
(Being the rectification of goods
purchased from Akil, wrongly
recorded in sales book.)
900
900
1800

16. (d) Transaction Recorded in Wrong
Subsidiary Book with Wrong Amount
E.g. Goods of Rs 900 Purchased from Akil, is wrongly
recorded in sales book as Rs.90. To nullify the effect
given in sales book, reverse the entry Rs.90 and give the
correct entry for purchases of Rs.900.
Date Particulars
L.
F.
Debit
Rs.
Credit
Rs.
Sales A/c…………………Dr.
Purchase A/c……..……...Dr.
To Akil A/c
(Being the rectification of goods
purchased from Akil Rs.900,
wrongly recorded in sales book as
Rs.90.)
90
900
990

17. (5) Compensatory Errors
In the books of accounts when more than one error
exists but because of their nullifying effects on debit and
credit sides, the trial balance tallies, such errors are
known as compensatory errors. E.g. Total of purchase
book is overcast by Rs.500 and receipt of Rs.500 from
Vanita is posted to her account by Rs.1,000.
Date Particulars
L.
F.
Debit
Rs.
Credit
Rs.
Vanita’s A/c…………….Dr.
To Purchase A/c
(Being the rectification entry
for excess credit to Vanita’s
A/c and excess debit to
Purchase A/c.)
500 500

19. (1) Error Regarding Posting
• Omission of Posting
• Posting Twice in an Account
• Posting of a Wrong Amount in an
Account
• Posting in an Account on the
Wrong Side
• Posting Wrong Amount on Wrong
Side of an Account

20. (a) Omission of Posting
While posting the transaction recorded in journal or
subsidiary books, if posting is omitted in any account by
mistake, it is known as an error of omission of posting
and this case the trial balance does not tally.
e.g. Goods of Rs.6,000 purchased from Darshan is
correctly recorded in the purchase book but posting in
Darshan account is omitted.
This error will be rectified by posting the amount on
the credit side of Darshan’s A/c as under.
Darshan’s account
Dr. Cr.
Date Particular
J.
F.
Rs. Date Particular
J.
F.
Rs.
By being the
amount posting
omitted for
goods purchased
6,000

21. (b) Posting Twice in an Account
Out of the two accounts affected, if in any one
account posting is done on the correct side but twice by
an error, the trial balance will not tally.
E.g. Goods of Rs.7,000 sold to Santosh is
recorded correctly in the sales book but by mistake it is
posted twice in the account of Santosh.
This error will be rectified by giving opposite
effect in the account which is posted twice, by the
amount of the transaction. Thus by writing Rs.7,000 on
the credit side of Snatosh’s A/c and the column of
particulare ‘by being an amount wrongly posted twice’
the error will be rectified.

22. (c) Posting of a Wrong Amount in an
Account
While posting from the primary books if a wrong
amount is posted in any account, the trial balance does
not tally.
e.g. Rs.500 received from Tarun is posted in his
account as Rs.50. In this case, by writing the deficit
figure of Rs.450 in Tarun’s A/c on the credit side and in
the column of particulars ‘by being an amount less
credited’ the error will be rectified.
When the account is posted by more amount, the error
is rectified by writing the amount of the difference on the
opposite side.
e.g. Rs.1300 paid for salary, is posted as Rs.3100 in
salary account. Here the error will be rectified by writing
Rs.1800 in salary A/c on the credit side (i.e. opposite
side) an in the column of particulars ‘by being excess
amount posted’.

23. (d) Posting in an Account on the
Wrong Side
While posting from the primary books, if the
amount is posted on the wrong side (i.e. on
credit side instead of debit side or vice versa),
the trial balance does not tally. E.g. Rs.800
discount received is debited to discount
account.
This error will be rectified by writing double the
amount on the correct side. Therefore, in
discount received A/c by writing Rs.1600 on the
credit side of and in the column of particulars ‘by
an amount posted on wrong side’ the error will
be rectified.

24. (e) Posting Wrong Amount on
Wrong Side of an Account
In this case, posting is done in an account on the
wrong side and that too of a wrong amount.
e.g Rs.2500 received from Palak, is written correctly in
the cash book but by mistake is written on the debit side
of Palak’s A/c as Rs.500.
Here the error in Palak’s A/c will be rectified by writing
on the credit side an amount equal to the sum of wrong
amount plus the correct amount i.e. Rs.3000 and in the
column of particulars ‘by posting of wrong amount on
wrong side.’

25. (2) Error Regarding Balance of an
Account
• Error in Finding out the Balance of
an Account
• Balance of an Account is Written
on the Wrong Side
• Balance of an Account is Omitted
to be Recorded
• Error in Writing the Balance of an
account
• Balance of an Account is Written
on the Wrong Side with a Wrong
Amount

26. (a) Error in Finding out the Balance
of an Account
If the balance of any account is found
either more or less the trial balance does not tally.
If the calculated balance is less, put the deficit
amount on the correct side to rectify the error.
E.g. The credit balance of Abhilash’s A/c is
worked out as Rs.3000 instead of Rs.13,000.
Here, write Rs.10,000 in Abhilash’s A/c on the
credit side and in the column of particulars ‘being
less balance worked out’
If the balance is worked out in excess,
error will be rectified by writing that excess
amount on the opposite side of that account.

27. (b) Error in Writing the Balance of an
account
In this case the balance is calculated
correctly but when it is brought forward, it is
written with a wrong amount and therefore the trial
balance does not tally. E.g. opening balance of
Rs.54,000 of Land and Building A/c us written as
Rs.45,000. Here by writing Rs.9,000 in Land and
Building A/c on the debit side and in the column,
of particulars ‘being opening balance less written
and thereafter by working out the closing balance
with appropriate amount, the error will be rectified.
If more amount is written for the opening
balance, the errors will be rectified by writing the
amount of difference on the opposite side of the
respective balance of that account.

28. (c) Balance of an Account is Omitted
to be Recorded
If the opening balance of any
account remains unrecorded, the trial
balance does not tally. E.g. Opening
balance of Rs.6,500 of machinery
account remains unrecorded. To rectify
this error write Rs.6,500 on the debit side
of machinery account and thereafter
work out the correct closing balance.

29. (d) Balance of an Account is Written
on the Wrong Side
By mistake it he balance of any account is
written on the opposite side (i.e. written on credit
side instead of debit side and vise versa), the trial
balance does not tally. E.g. A balance of Rs.2700 of
Darshna, a creditor’s account is written on the
debit side. Error in Darshna, a creditor’s account
will be rectified by writing double the amount i.e.
Rs.5400 on the credit side and in the column of
particulars ‘being the amount written on the wrong
side’ and thereafter calculating correct closing
balance.

30. (e) Balance of an Account is Written on
the Wrong Side with a Wrong Amount
The trial balance does not tally if the
balance of any account is written on the
wrong side with a wrong amount. E.g.
Credit balance of Ram’s A/c Rs.5,600 is
written on the debit side as Rs.6,500. This
error will be rectified by writing Ts.12,100
on the correct side i.e. on credit side and
the column of particulars ‘being the
balance written on wrong side with wrong
amount’ and thereafter writing the closing
balance with the correct amount.

31. (3) Errors in Totaling the Subsidiary
Books
The trial balance does not tally if an error is
committed while totaling subsidiary books like
Purchase Book, Sales Book, Goods return Book, Cash
Book etc. This error will be rectified by writing
necessary note in that respective account. A journal
entry is not necessary to rectify this type of error.
e.g. (1) Total of purchase book is under cast by
Rs.1500. This error will be rectified by writing in
purchase account Rs.1500 on debit side and in the
column of particulars ‘being the total undercast.’ (2) In a
three column cash book on payment side discount
column total is overcast by Rs.50. This error will be
rectified by writing in discount account Rs.50 on debit
side and in the column of particulars ‘being total
overcast’
After rectifying these errors closing balance should
be calculated with the correct amount.

32. (4) Errors Committed While
Preparing Trial Balance
While preparing the trial balance there
remains a possibility of errors like, error in
totaling of the trial balance, balance of an
account is omitted to be recorded, in recorded
twice, is recorded with wrong amount, is
recorded on the wrong side, or is recorded on
wrong side with wrong amount.
In order to rectify these types of errors no
journal entry is required to pass. After rectifying
the errors, a new trial balance is prepared and it
will get tallied.

33. SUSPENSE ACCOUNT
When the trial balance does not tally
because of some accounting errors and it
requires more time to prepare final
accounts after detection and rectification
such errors, but there is an urgency for
preparing final accounts, temporarily the
difference in the trial balance is transferred
to one account, in order to get it tallied and
that account is known as a Suspense
Account,

34. End of Chapter