Meaning of Rectification of Errors

To erro is human. This is the reason that in spite of being careful and sometimes due to carelessness, different types of errors are made by the accountant. Some inaccuracies or errors are such that they do not affect the total of trial balance; But there are some errors which affect the sum of trial balance. In order to reveal the true position of the business, it is necessary that errors are detected and necessary accounts are made for correction. This action is called ‘correction of inaccuracies or errors’.

The procedure followed to rectify the errors committed in the book of accounts and to set right accounting records is called Rectification of Errors.

In fact, some people think that by erasing the errors with an eraser, a clean account should be made in their place, or by cutting out the error, making a clean account in its place and signing it there, but by doing this, the accounts get mutilated and dirty. will go and the accounts will not be reliable, so it would be appropriate that Accounting Entries should be made for the correction of errors. The adverse effects of errors can be neutralized and cancelled by accounting entries

1. MeaningofRectificationofErrors:
Toerroishuman.Thisisthereasonthatinspiteofbeingcarefulandsometimesdueto
carelessness,differenttypesoferrorsaremadebytheaccountant.Someinaccuraciesor
errorsaresuchthattheydonotaffectthetotaloftrialbalance;Buttherearesomeerrors
whichaffectthesumoftrialbalance.Inordertorevealthetruepositionofthebusiness,itis
necessarythaterrorsaredetectedandnecessaryaccountsaremadeforcorrection.This
actioniscalled‘correctionofinaccuraciesorerrors’.
Theprocedurefollowedtorectifytheerrorscommittedinthebookofaccountsandtoset
rightaccountingrecordsiscalledRectificationofErrors.
Infact,somepeoplethinkthatbyerasingtheerrorswithaneraser,acleanaccountshould
bemadeintheirplace,orbycuttingouttheerror,makingacleanaccountinitsplaceand
signingitthere,butbydoingthis,theaccountsgetmutilatedanddirty.willgoandthe
accountswillnotbereliable,soitwouldbeappropriatethatAccountingEntriesshouldbe
madeforthecorrectionoferrors.Theadverseeffectsoferrorscanbeneutralisedand
cancelledbyaccountingentries.
ObjectivesofRectificationofErrors:
Correctionoferrorshasthefollowingobjectives.
(1)Preparationandmaintenanceofaccurateaccountingrecords.
(2)Determiningthecorrectprofitorlossfortheaccountingperiod.
(3)Preparationofacorrectbalancesheetsothatitreflectsthetrueandfairfinancialposition
oftheundertaking.
Iftheerrorsarenotrectified
(1)Theprofitandlossaccountwillnotreflectthetrueprofitorloss.
(2)Thebalancesheetwillnotreflectthetrueandcorrectfinancialposition.
(3)Defectiveaccountscancreateproblemsatvariousstagesofthebusiness.
ClassificationofRectificationofErrors
Themostimportantfactorforcorrectionoferrorsisthetimeelementi.e.weshouldsee
whentheerrorsaredetected.Therefore,fromthepointofviewofaccounting,correctionof
errorscanbedividedintothreecategories:
Rectificationoferrors
(1)Beforepreparingtrialbalance

2. (2)Afterpreparingtrialbalance
(3)Afterpreparationoffinalaccounts/balancesheet
Thestudywillbedoneunderthefollowingheadings:
(1)One–SidedErrors
(2)Double–SideErrors
RectificationoferrorsbeforepreparingtrialBalance
RectificationofOne–sideerrors
Whentheerrorisinonlyoneaccountortheerroraffectsonlyonesideofanaccount,such
erroriscalledOne-Sideerror.Thistypeoferrorisrectifiedbydebitingorcreditingthe
affectedaccountasthecasemaybe.Thereisnoneedtomakeajournalentryforthis.
Thistypeoferrorcanbedividedintothefollowingcategories:
(1)ErrorsofCasting
(2)ErrorsofPosting
(3)ErrorsinCarryForward
(4)ErrorsofBalancing
(1)ErrorsofCasting—-Therecanbeamistakeinapplyingthesumoftheassistant.The
totalcanbeless(Short,Undercasting)ormore(Overcasting).Applyinglessyogaor
applyingmoreyogawillbecalledimpurity.
1(UndercastingoraddedShort)—(a)AccountswhichhaveDebitBalance,iftheirtotals
havebeenwrittenless(Undercasting,AddedShort),thenforitscorrectionToUndercasting
ofBook–₹……..iswritteninthedebitsideofthataccount.goes.Forexample,thisshould
bedoneifthesumofPurchasesBook,BillsReceivableBook,SalesReturnsBooketc.is
reduced.
(b)AccountswhichhaveCreditBalance,iftheirtotalsarewrittenless,thenforits
improvement,ByUndercastingof…Book-₹…..shouldbewritteninthecreditsideofthat
account.Forexample,thisshouldbedoneifthesumofSalesBook,BillsPayableBook,
PurchasesReturnsBooketc.isreduced.
2(Overcasting)—(a)IfthesumoftheaccountshavingDebitBalanceismore,thenforits
improvement,thesameamountshouldbewritteninthecreditsideoftheseaccounts.Like-
PurchasesBook,SalesReturnsBookorReturnsInwardBook,BillsReceivableBookwillbe
writtenontheircreditsideasfollows:ByOvercastingof…..Book…..–₹….

3. (b)Inordertorectifytheovercastingofsuchaccountswhichhavecreditbalance,itwillbe
writteninthedebitsideasfollows
ToOvercastingof……
Forexample,thiswillbedonetopurifyOvercastinginSalesBook,BillsPayableBook,
PurchasesReturnsBook.
(2)ErrorsofPosting—(a)Writinglessamountatthetimeofwriting:
Sometimes,whilewritingabook,thecorrectamountiswritteninoneaccount,butless
amountiswrittenintheotheraccount.Toremovethistypeofinaccuracy,theconcernedside
ofthataccountwritestheamountbywritingwrongpostingoftheamount;As
Qs1>Paid₹250toSohan,correctlyenteredincashBook,butpersonalAccountofsohan
wasdebitedwith₹250Only.
Ans>ThefollowingentrywillbemadeonthedebitsideofSohan’saccountsoastocorrect
themistakeof₹250-205=₹45
Towrongpostingoftheamount₹45
Sohan’sAccount
Dr.
ToWrongpostingoftheaccount₹45
Qs2>Received₹612fromShekharhasbeenpostedtohiscreditas₹126.
Ans>₹612–126=₹486willbeaddedtothecreditsideofShekhar’saccountByWrong
postingoftheAmount₹486
(b)Excessamountwrittenatthetimeofposting:
Sometimesexcessamountisenteredbymistakeatthetimeofposting.Insuchasituation,
theamountofdifferenceshouldbeascertainedfirstandtheamountofdifferenceshouldbe
writtenontheothersideoftheaccount;As
Qs1>Amritawasgiven₹560butheraccountwasdebitedfor₹650bymistake.
Ans>Toremovethiserror,₹650-560₹=90willhavetobedepositedinAmrita’saccount.
Qs2>Received₹120fromAnilkapoorcorrectlyenteredinthecashbookbutthepersonal
A/cofAnilkapoorwascreditby₹210
Ans>Torectifythismistake,debitsideofAnilKapoor’saccount(210-120)willhaveto
write₹90asfollows:

4. ToDifferenceinamountposted₹90
(C)Amountpostedonthewrongsidewhileposting:
Sometimes,whilepostingintheledger,creditinsteadofdebitordebitinsteadofcreditis
postedintheledger.Toremovethistypeoferror,thesumoftwoamountsshouldbewritten
intherightside,thatis,thisamountwhichshouldhavebeenwritteninthisaccount,butwas
notwritteninthesideinwhichtheaccountshouldnothavebeendone,butwasdone,Its
amount,suchas:
Qs>Therewasanamountof₹83.60inthecreditsideofAwadhesh’saccountbut₹38.06
hasbeenwritteninthedebitsideofhisaccount.
Ans>₹83.60+38.06=₹121.66hastobedebitedtothecreditsideofAwadhesh’s
account,sothatthedebitcanbeneutralisedandthecreditcanbeaffected.
Bypostingonthewrongside₹121.66
(d)MissedPosting:
SometimeswhiledoingKhataunipostingisdonecorrectlyinoneaccountbutpostingis
missedinanotheraccount.Insuchasituation,fortherectificationoferrors,themissing
amountwillbewritteninthenameoftheconcernedaccountoronthedepositside,asthe
casemaybe.
Forexample,whilepostingonthedebitsideofthecashbook,thediscountof₹25givento
Abhaywasmissed.ThismeansthatAbhay’saccountisshortcreditedby₹25.Sofor
correctionwewillcreditAbhay’spersonalaccountby₹25.
Byomissioninpostingofdiscount₹25
RectificationofDouble–sidedorTwo–sideerrors
Bilateralerrorsaffecttwoaccounts.Hence,theyarerectifiedthroughjournalentries.To
correctdouble-sidederrors,oneaccountisdebitedandtheotheriscredited.Thequestion
arisesthathowtomakeentriesforcorrection?
CorrectionMethod:
(1)Firstofallthecorrectentrywhichshouldhavebeenthereshouldbewritten.
(2)Afterthatthewrongentrywhichhashappenedshouldbewritten.
(3)RectifiedEntryshouldbewrittenbycomparingtheabovetwoaccounts.

5. Infact,tocorrectbilateralerrors,firstthecorrectaccountandtheimpureaccountshouldbe
writtenintherough.Afterthis,theaccountwhichiscommoninboththeaccountsshouldbe
struckoffthepencilandarectifiedentryshouldbemadeonthebasisoftheremaining
accounts.Wrongentryshouldbereversedforrectification.Makingacorrectedentrynullifies
theeffectoferrors.
(1)Iftheerrorisrelatedtotwoaccountsandisinthesamesideandcorrectionof
theoreticalerrors–Sometimestheaccountwhichistobesetoffisnotdebitedandanother
accountisdebited.Forexample,Rs500wasspentonrepairingthebuilding.Bymistakethis
amountwasdebitedtothewagesaccount.
(1)CorrectEntrythatshouldhavebeen
RepairsA/cDr.
ToCashA/c
(2)Enteredbymistake
WagesA/c Dr.
ToCashA/c
(3)RectifyingEntry
RepairsA/c Dr.
ToWagesA/c
(BeingbuildingrepairswronglydebitedtowagesA/cnowrectified)
Rectificationoferrors
SinceCashA/chasbeencreditedinboththeentries,wewillskipthisCommonEntry.Since
RepairsA/cistobeopened(itistobedebited)andWagesA/cistobeclosed,therefore
WagesA/cwhichhasalreadybeendebited,willbecreditedbyreversingit.
Note–Onlythethirdentrywillbedoneinthequestionandanswer,thefirsttwoshouldbe
shownintheroughonly.
(2)Wheninsteadofcreditingaproperaccountanotheraccountiscredited–e.g.₹1000
receivedfromA.PrasadiswronglycreditedtoR.Prasad’saccount.
(1)CorrectEntrythatshouldhavebeen
CashA/c Dr.
ToA.Prasad
(2)Enteredbymistake
CashA/c Dr.
ToR.Prasad

6. (3)RectifyingEntry
R.PrasadDr.
ToA.Prasad
(BeingamountreceivedfromA.PrasadwronglycreditedtoR.prasad,nowrectified)
(3)SometimesmistakesarealsomadeduetomistakesinunderstandingCapital
ExpenditureandRevenueExpenditure.Forexample,consideringcapitalexpenditureas
revenueexpenditureandincomeexpenditureascapitalexpenditure.Sucherrorsarecalled
ErrorsofPrinciples.Toremovethesetypesoferrors,thesamemethodsareadoptedwhich
havebeenaccountedforabove.
Example–₹2,000wasspentonrepairingamachinebutMachineryAccountwasdebited
bymistake.Torectifythis,thefollowingentrywillbemade
RepairsA/c Dr2,000
ToMachineryA/c 2,000
(BeingexpensesofrepairschargetomachineryA/c,nowrectified)
(4)ErrorsofOmission—Missingerrorsareofthefollowingtwotypes:1—-Errorsof
completeomission—Ifatransactionisnotrecordedinthejournalorbooks,thenitiscalled
acompletelymissederror.Asimplejournalentryshouldbemadetocorrectthistypeof
error.
ExampleAcreditsalesofgoodsworth₹1,000tosavedwasomittedtobeenteredinthe
salesbook
Zaved Dr.1,000
ToSalesA/c 1,000
(Beinggoodssalesoncreditnotcreditedintheledger)
2–Errorsofpartialomission—Sometimesthetransactionsareaccountedforinthe
concernedsubsidiaryonlybutarenotdebitedtotheotheraccount,thenitiscalledpartial
omissionerror.SuspenseAccountorSuspenseAccountisusedtocorrectthistypeof
mistake.
Forexample—(Qs1)GoodspurchasedoncreditfromShyam₹2,000.Theaccountofits
purchasewasdoneinthesamebutwasnotdepositedinShyam’saccount.
SuspenseA/c Dr.2,000
ToShyamA/c 2,000
(Beinggoodspurchasedoncreditnotcreditedintheledger)

7. (5)Whenthereisexcessdebit/creditinoneaccountandexcesscreditintheother–in
suchasituation,reversetheentrybytheamountofexcessdebit/credit(i.e.bytheamountof
thedifference).
Forexample
(Qs1.)Pankajsoldgoodsworth₹215toPrakashbut₹251wasdebitedinthesalesbook.
Ans::Theamountofdifferenceis₹251–215=₹36,thatmeanstheamountofsalehas
increasedby₹36.Hencethefollowingentrytocorrectdo
SalesA/c Dr.36
ToPrakash 36
(Beingsalesexcesscreditedby₹36,nowrectified)
Sometimestheaccountingoftransactionsinthejournaliscorrectbuttheamountis
shownlessormore.—
Iflessamounthasbeenwrittenthenfirstitshouldbeseenthathowmuchlessamounthas
beenshownintheentry.Afreshcorrectionentryshouldbemadeofthelesseramount
shown.Iftheamountshownismore,thedifferenceamountwillbeshownbyenteringthe
opposite.
ForExample
(Qs1.)APurchasesof₹1,000fromRahimenteredinthePurchasesdaybookas₹100.
Giverectifyingentry
(1)CorrectEntrythatshouldhavebeen
PurchasesA/c Dr.1,000
ToRahimA/c 1,000
(2)Entryenteredbymistake
purchasesA/c Dr.100
ToRahim’sA/c 100
Hencedifference=₹1,000–100=₹900forwhichcorrectionentrywillbemade.
(3)RectifyingEntry
PurchasesA/c Dr.900
ToRahim’sA/c 900

8. (Beingrectifyingentrymade)
Note::OnlyStep3entryshouldbedoneintheexam.
(5)ErrorsaffectingmorethanTwoAccounts–Someerrorsaffectmorethantwo
accounts.Insuchasituation,fortheirrectification,debit/credittheaffectedaccountsasper
therequirement.Ordinarilytheaccountswhichweretobedebitedandwerenotdebited,will
bedebited;Accountsthatwereerroneouslycreditedwillbedebitedandthecustomer’s
personalaccountwillbecreditedwithdoubletheamount.
Similarly,theaccountswhichshouldhavebeencreditedandwerenotcredited,willbe
credited;Theaccountthatwasdebitedbymistakewillalsobecreditedandthepersonal
accountwillbedebitedbydoubletheamount.
Forexample::Rs5,000waspurchasedfromSatyamwhichwaswronglyenteredinthe
SalesBook
(1)CorrectEntrythatshouldhavebeen
PurchasesA/c Dr.5,000
ToSatyam’sA/c 5,000
(2)Entryenteredbymistake
Satyam’sA/c Dr.5,000
ToSalesA/c 5,000
(3)RectifyingEntry
PurchasesA/c Dr.5,000
SalesA/c Dr.5,000
ToSatyam’sA/c 10,000
FrequentlyAskedQuestions
Qs1.Whatarethe3stagesofrectificationoferrors?
Ans.The3stagesofrectificationoferrors
(1)Beforepreparingtrialbalance
(2)Afterpreparingtrialbalance
(3)Afterpreparationoffinalaccounts/balancesheet
Qs2.Whatisrectificationoferrorsanditstypesinaccount

9. Ans.Insummary,rectificationisanimportantprocessinaccountingthatensuresthat
financialstatementsareaccurateandreliable.Therearedifferenttypesofrectification
methodsthatcanbeusedtocorrecterrorsandmistakesintheaccountingprocess.
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