Dear Teachers,
These slides have been prepared based on the NCERT syllabus to support you in teaching Plus One and Plus Two Accountancy and Computerised Accounting.
Please review and verify the content before using it in your classrooms. If you find any errors or have feedback, please let me know.
Mujeeb Rahiman C
HSST Commerce
GHSS Pattikkad
Malappuram Dt.
✉️ mujeebchemmala@gmail.com
9995983075 �
Chapter 6
Trial Balance and Rectification of Errors
Classification of Errors
Classification of Errors
Look closely at the next slides and see if you can spot any mistakes
01/03/2021
Cash Account
6,00,000
6,00,000
To Capital Account
Dr.
Date
Amount
Date
Amount
Particulars
Particulars
Cash Account
Dr.
Cr.
J.F.
J.F.
01/04/20
Capital Account
600000
Wrong Posting
Journal
Date
Particulars
LF
Debit Amt
Credit Amt
Posting the above journal entry to cash A/c.
Is this posting correct ?
Date
Amount
Date
Amount
Particulars
Particulars
Cash Account
01/04/20
Dr.
Cr.
J.F.
J.F.
Capital Account
50000
01/04/20
Bank Account
4000
02/04/20
Furniture Account
2000
04/04/20
Purchase Account
3000
15/04/20
Drawings Account
1000
30/04/20
Sunil Account
3400
63400
63400
53400
30/04/20
Balance c/d
Wrong Totalling
Totalling cash A/c.
Is this totalling correct ?
Purchases Day Book
Date
Name of Supplier
L.F.
Amout
Invoice No.
01/09/2017
714
M/s Ratna Traders
25 Shirts @ Rs.300
M/s Fashion House
20 Pants @ Rs.700
7500
14000
21500
Less 10% Trade discount
2150
19350
10 Fancy Trousers @ Rs.500
20 Fancy Hat @ Rs. 100
5000
2000
7000
350
6650
36000
Total Credit Purchases
327
07/09/2017
Less 5% trade discount
Over casting of purchase book
Is this totalling correct ?
Purchases Day Book
Date
Name of Supplier
L.F.
Amout
Invoice No.
01/09/2017
714
M/s Ratna Traders
25 Shirts @ Rs.300
M/s Fashion House
20 Pants @ Rs.700
7500
14000
21500
Less 10% Trade discount
2150
19350
10 Fancy Trousers @ Rs.500
20 Fancy Hat @ Rs. 100
5000
2000
7000
350
6650
25000
Total Credit Purchases
327
07/09/2017
Less 5% trade discount
Under casting of purchase book
Is this totalling correct ?
Classification of Errors
1. Errors of Commission
These are the errors which are committed due to wrong posting of transactions, wrong totalling or wrong balancing of the accounts, wrong casting of the subsidiary books etc.
Most of the errors of commission affect in the trial balance.
(1) Purchased goods for Rs. 2, 00,000
(2) Sold goods to Mr. Sunil Rs. 70,000
(3) Rs. 35,000 withdrawn by the proprietor for personal use.
Purchases A/c
2,00,000
2,00,000
To Cash Account
Dr.
(Purchased goods for cash)
2,35,000
2,35,000
Total
Drawings Account
35,000
35,000
To Cash Account
Dr.
(Withdrew cash for personal use)
Journal
Complete Omission
Journalising the above transactions.
Is this journalising correct ?
01/03/2021
Cash Account
6,00,000
6,00,000
To Sales Account
Dr.
Date
Amount
Date
Amount
Particulars
Particulars
Cash Account
Dr.
Cr.
J.F.
J.F.
01/04/20
Sales Account
600000
Partial Omission
Date
Amount
Date
Amount
Particulars
Particulars
Sales Account
Dr.
Cr.
J.F.
J.F.
Is this posting correct ?
Classification of Errors
2. Errors of Omission
The errors of omission may be committed at the time of recording the transaction in the books of original entry or while posting to the ledger. These can be of two types:
(i) error of complete omission
(ii) error of partial omission
Partial omission affect the tallying of the trial balance.
(1) Purchased Machinery for Rs. 1,00,000
(2) Paid for repairs of Machinery Rs. 200
Purchases A/c
1,00,000
1,00,000
To Cash Account
Dr.
(Purchased machinery for cash)
Machinery Account
200
200
To Cash Account
Dr.
(paid for repairs)
Journal
Errors of principle
Is this journalising correct ?
Classification of Errors
3. Errors of Principle
Accounting entries are recorded as per the generally accepted accounting principles. If any of these principles are violated , errors resulting from such violation are known as errors of principle.
These errors do not affect the trial balance.
Purchases Day Book
Date
Name of Supplier
L.F.
Amout
Invoice No.
01/09/2017
714
M/s Ratna Traders
25 Shirts @ Rs.300
M/s Fashion House
20 Pants @ Rs.700
7500
14000
21500
Less 10% Trade discount
2150
19350
10 Fancy Trousers @ Rs.500
20 Fancy Hat @ Rs. 100
5000
2000
7000
350
6650
36000
Total Credit Purchases
327
07/09/2017
Less 5% trade discount
Correct total 26000
Is this totalling correct ?
Purchase book overcast by Rs. 10000
Sales Book
Date
Name of Customer
L.F.
Amout
Invoice No.
01/04/2017
325
Rohit Stores
30 Kids Books @ Rs. 60
Mega Traders
20 Animal Books @ Rs. 50
1800
1000
2800
Less 5% Trade discount
140
2660
50 Writing Pads @ Rs. 20
50 Colour Books @ Rs. 30
1000
1500
320
2820
15480
Total Credit Sales
329
07/04/2017
20 Ink Pads @ 16 each
Correct total Rs. 5480
Is this totalling correct ?
Sales book overcast by Rs. 10000
The overcasting of Purchase book and the Sales book by the same amount acts as a compensating error, as their effect neutralises each other.
Classification of Errors
4. Compensating Errors
When two or more errors are committed in such a way that the net effect of these errors on the debits and credits of accounts is nil, such errors are called compensating errors. Such errors do not affect the tallying of the trial balance.
Classification of Errors
1. Errors of Commission
2. Errors of Omission
3. Errors of Principle
4. Compensating Errors
Rectification of Errors
1. Errors which do not affect the trial balance
2. Errors which affect the trial balance
From the point of view of rectification, the errors may be classified into the following two categories.
1. Errors which do not affect the trial balance
The errors which do not affect the trial balance usually take place in two accounts in such a manner that it can be easily rectified through a journal entry.
1. Credit sales to Mohan Rs. 10,000 were not recorded in the sales book.
This is an error of complete omission.
Mohan’s account has not been debited
Sales account has not been credited
Mohan’s Account
10,000
10,000
To Sales Account
Dr.
2. Credit sales to Mohan Rs. 10,000 were recorded as Rs. 1,000 in the sales book.
This is an error of commission.
Mohan’s Account
1,000
1,000
To Sales Account
Dr.
Wrong Entry
Mohan’s Account
10,000
10,000
To Sales Account
Dr.
Correct Entry
Mohan’s Account
9,000
9,000
To Sales Account
Dr.
Rectification Entry
3. Credit sales to Mohan Rs. 10,000 were recorded as Rs. 12,000.
This is an error of commission.
Mohan’s Account
12,000
12,000
To Sales Account
Dr.
Wrong Entry
Mohan’s Account
10,000
10,000
To Sales Account
Dr.
Correct Entry
Sales Account
2,000
2,000
To Mohan’s Account
Dr.
Rectification Entry
4. Credit sales to Mohan Rs. 10,000 was correctly recorded in the sales book but was posted to Ram’s account.
This is an error of commission.
Ram’s Account
10,000
10,000
To Sales Account
Dr.
Wrong Entry
Mohan’s Account
10,000
10,000
To Sales Account
Dr.
Correct Entry
Mohan’s Account
10,000
10,000
To Ram’s Account
Dr.
Rectification Entry
5. Rent paid Rs. 2,000 was wrongly shown as payment to landlord in the cash book
Landlord’s Account
2,000
2,000
To Cash Account
Dr.
Wrong Entry
Rent Account
2,000
2,000
To Cash Account
Dr.
Correct Entry
Rent Account
2,000
2,000
To Landlord’s Account
Dr.
Rectification Entry
2. Errors which affect the trial balance
The errors which affect the trial balance usually affect one account and a journal entry is not possible for rectification unless a suspense account has been opened.
Suspense Account
Even if the trial balance does not tally due to the existence of one sided errors, accountant has to carry forward his accounting process to prepare financial statements. The accountant tallies his trial balance by putting the difference on shorter side as ‘suspense account’.
Rectify the following errors :
Cash sales Rs. 16,000
(i) were not posted to sales account.
(ii) were posted as Rs. 6,000 in sales account.
(iii) were posted to commission account.
Suspense Account
16,000
16,000
To Sales Account
Dr.
(i)
Suspense Account
10,000
10,000
To Sales Account
Dr.
(ii)
Commission Account
16,000
16,000
To Sales Account
Dr.
(iii)
Rectification of Errors in the Next Accounting Year
If some errors committed during an accounting year are not located and rectified before the finalisation of financial statements, suspense account cannot be closed and its balance will be carried forward to the next accounting period.
When the errors committed in one accounting year are located and rectified in the next accounting year, profit and loss adjustment account is debited or credited in place of accounts of expenses/losses and incomes/gains in order to avoid impact on the income statement of next accounting period.
MUJEEB RAHIMAN C
HSST COMMERCE
GHSS PATTIKKAD
MALAPPURAM DT
MUJEEB RAHIMAN C
HSST COMMERCE
GHSS PATTIKKAD
MALAPPURAM DT