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Rectification of ErrorsRectification of Errors

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.

The errors are broadly classified into two types:

  1. Rectification of errors that do not influence the trial balance
  2. Rectification of errors that influence the trial balance

Rectification of errors that do not influence the trial balance

Rectification of errors that do not influence the trial balance include errors that involve errors on both sides of debit and credit and can be rectified by passing a journal entry.

These errors impact two accounts simultaneously and are therefore known as two-sided errors. The errors can occur both on the debit and credit side of the account and need to be corrected or rectified by passing a journal entry to correct the debit and credit.

An error can be rectified by reversing the impact of wrong entry on debit and credit side and restoring the correct debit and credit entry.

Whenever there is excess credit or shortage in debit, then debiting the concerned account is done, similarly when there is shortage of credit and excess of debit, then the concerned account should be credited.

Example

Credit sales to Rajesh of ₹ 5,000 were not recorded in the sales book. Rectify the error.

The rectification of this error will be as follows:

Rajesh’s A/c Dr. 5000

To Sales A/c 5000

(Being credit sales to Rajesh recorded correctly)

Rectification of errors that influence the trial balance

Rectification of errors that influence the trial balance occurs on any one side of the trial balance and such errors can only be rectified by passing a journal entry along with opening of a suspense account.

Such errors are also known as one sided errors as it impacts only one side of the account (either debit or credit). Such errors are rectified by adding a note in account or by passing a journal entry by creation of a Suspense account.

The process of rectification is as follows:

  1. Identification of account having error.
  2. Determine the shortage or excess in the account.
  3. If any difference is created due to excess credit and shortage in debit, then debit the account with the difference amount as determined earlier.
  4. If any difference is due to excess debit and shortage of credit, then credit the account with the difference.
  5. Finally, complete the rectification by debiting or crediting the suspense account.

Example

Depreciation written off on machinery ₹4000 not recorded in Machinery account

Suspense A/c Dr. 4000

To Machinery A/c 4000

(Being rectification towards omission of posting in machinery account)

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