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Page 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. Page 3 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. 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 Page 4 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. 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 TYPES OF ACCOUNTING ERROR: • Errors which do not affect the trial balance. • Errors which affect the trial balance. Page 5 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. 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 TYPES OF ACCOUNTING ERROR: • Errors which do not affect the trial balance. • Errors which affect the trial balance. 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 errorsRead More
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1. What is a trial balance and why is it important in accounting? |
2. How do you prepare a trial balance? |
3. What are some common errors that can occur in a trial balance? |
4. How can errors in a trial balance be rectified? |
5. What is the importance of rectifying errors in a trial balance? |
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