Rectification of errors ppt

rectification of errors journal entries and rectification of errors problems with solutions and rectification of errors problems with solutions
Dr.DinoHardy Profile Pic
Dr.DinoHardy,United Arab Emirates,Teacher
Published Date:25-07-2017
Your Website URL(Optional)
CPT Fundamentals Of Accounting Chapter 2 Unit 8 CA.V.K.Jain Different types of errors. One sided and two sided errors. Suspense account. Steps involved in locating errors : Before preparation of TB After TB but before final accounts After final accounts – in the next year Unintentional omission or mistake in the process of recording transactions. May be due to Mathematical mistakes , At the time of applying principles and policies , Misinterpretation of facts or Oversight Wrong entry. Wrong posting from cash and subsidiary books. Wrong casting of subsidiary book. Wrong casting of ledger balances. Credit purchases of Rs. 5,000 has been entered in purchase day book as Rs. 6,000. Total of sales book has been under casted by Rs. 1,000. Furniture purchased has been entered in Purchase Day Book. Salary paid 10,000 has been posted to Salary account as 1,000. Goods sold to Mr.David has been omitted to be recorded in the Books of Account. Goods purchased from Mr. Smith Rs. 10,000 was correctly entered in Purchase Day Book but was omitted to be posted in Mr. Smith a/c. Debit side total of Cash Book was under/over casted by Rs. 1,000. Errors of Principle. Clerical errors : Errors of Omission Errors of Commission Compensating Errors Contravention or violation of accounting principles. No discrimination of Capital or Revenue expenditure. Capital expenditure has been treated as Revenue expenditure or vice versa. TB will agree. Errors of Omission : Full omission - Omitted to record an entry completely from subsidiary books. TB will agree. Partial omission - Omitting to post account in the Account from cash book or subsidiary books . TB will not agree. Errors of Commission – Wrong amount in Primary Books (TB will agree) Wrong casting (TB will not agree) Posting wrong side (TB will not agree) Posting wrong amount (TB will not agree) Wrong balancing of account (TB will not agree) Compensating errors : Two or more errors. One side of error is compensated by other side intotality. TB will agree To check arithmetic accuracy – TB is prepared . If it does nottally ,it can be said that there might be some errors whichrequires rectification thereof . Tallying of TB can not give guarantee about correctness of accounts . There may still some errors after matching TB . TB total again Ledger balances again Casting should be checked again Posting of amounts equal to half of the difference to be checked again Rectification means correction and is to be made if and only if there is some error. In accounting omission is also considered as an error and treatment is done accordingly. Before preparation of TB. After preparation of TB but before final Accounts. After preparation of final accounts i.e. in the Next year. Some errors which affect one side of account or more than one account in such a way that it is not possible to pass a complete rectification entry. These can be corrected by making rectification statement in the appropriate side of concerned account. Purchase book for December is under cast by Rs. 10,000. Implications : There is no error in supplier a/c hence no questionof correction in supplier account. Only purchase a/c is to be corrected. Purchase account debit side : “To under casting of purchases for December”by Rs. 10,000 Rs 10,000 received from Mr. David has been entered on Dr side of his account. Implications: Cash book is correctly written. Wrong debit in Mr. David a/c Rs. 10,000 is to be removed and also credit is to be given Rs. 10,000. Total difference would be of Rs. 20,000 Credit side : By posting on wrong side ……….. Bills receivable received from Mr . A Rs. 10,000 was posted to the credit side of Bills payable. However it was correctly posted in A a/c. Implications : B/R account was not debited by 10,000 B/P account was wrongly credited by 10,000 A’s account was correctly posted Dr side of B/P – “To wrong posting ” Rs. 10,000 Dr side of B/R – “ To omission of posting” Rs. 10,000 While posting Discount column Dr side of cash book , discount of 300 allowed to Ankit has not been posted. There is no error in Cash book . Total of discount column presumably been posted to discount on debit side. Error is not crediting Ankit account by 300. It should be done by making an entry: “By omission of posting of discount …….300” Rs.150 paid to Prateek has been posted as 15 to the debit of his account. There is no error in cash book. Prateek has been debited short by 135. Rectifying entry will be : “To mistake in posting 135”

Advise: Why You Wasting Money in Costly SEO Tools, Use World's Best Free SEO Tool Ubersuggest.