(Fix Accounting Mistakes Like a Pro!)
What are Accounting Errors?
Imagine writing ₹500 as ₹5,000 in your cash book. That’s an error! Rectification means fixing these mistakes before preparing financial statements.
Why it matters:
- Ensures accurate financial reports
- Prevents exam marks deduction 😉
- Builds good accounting habits
✅ Golden Rule:
Errors found before trial balance → Fix with journal entries!
4 Common Error Types (with Examples)
| Error Type | What Happened? | Example |
|---|---|---|
| 1. Omission | Transaction not recorded | Forgot to enter ₹10,000 sale |
| 2. Commission | Wrong amount/account | Wrote ₹5,000 instead of ₹500 |
| 3. Principle | Wrong accounting rule | Treated asset as expense |
| 4. Compensating | Two errors cancel out | ₹1,000 under debit + ₹1,000 over credit |
How to Rectify Errors? 3 Simple Steps
Scenario: Bought chairs for ₹15,000 cash, but recorded as ₹1,500.
Step 1: Identify Original Entry
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Wrong Entry: Furniture A/c Dr. ₹1,500 To Cash A/c ₹1,500
Step 2: Determine Correct Entry
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Correct Entry: Furniture A/c Dr. ₹15,000 To Cash A/c ₹15,000
Step 3: Pass Rectification Entry
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Furniture A/c Dr. ₹13,500 (15,000 - 1,500) To Cash A/c ₹13,500
(Adds missing ₹13,500 to Furniture and reduces Cash)
Error-Specific Fixes (With Journal Entries)
Case 1: Omission Error
Mistake: Forgot to record ₹20,000 credit sales to Raj.
Fix:
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Raj's A/c Dr. ₹20,000 To Sales A/c ₹20,000
Case 2: Commission Error
Mistake: Wrote ₹7,000 instead of ₹700 for stationery.
Fix:
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Stationery A/c Cr. ₹6,300 (7,000 - 700) To Cash A/c ₹6,300
(Reduces excess debit in Stationery)
Case 3: Principle Error
Mistake: Treated laptop purchase (asset) as expense.
Original Wrong Entry:
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Repairs A/c Dr. ₹50,000 To Cash A/c ₹50,000
Fix:
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Laptop A/c Dr. ₹50,000 To Repairs A/c ₹50,000
Image 3: Error Types Visual
Solved Problems (Test Yourself!)
Problem 1: Paid ₹8,000 rent, but recorded as ₹800.
Rectification Entry:
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Rent A/c Dr. ₹7,200 (8,000 - 800) To Cash A/c ₹7,200
Problem 2: Sold goods to Meena ₹12,000, but not recorded.
Rectification Entry:
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Meena's A/c Dr. ₹12,000 To Sales A/c ₹12,000
Problem 3: Machinery repairs ₹10,000 debited to Machinery A/c.
Fix:
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Repairs A/c Dr. ₹10,000 To Machinery A/c ₹10,000
Pro Tips for Error-Free Accounting
- Recheck entries daily
- Use pencil for first-time entries
- Verify totals with calculator
- Learn common errors:
- Swapping debit/credit
- Transposing numbers (58 vs 85)
💡 Exam Hack:
When rectifying, always mention:
“Being rectification of error in…”
When Errors Slip Through?
If found after financial statements:
- Adjust in next year’s accounts
- Use “Suspense Account”
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Suspense A/c Dr. XXX To Correct A/c XXX
Conclusion
Master error rectification to:
- Score higher in exams 📚
- Avoid real-world accounting blunders 💼
- Become a detail-oriented professional 🎯
Final Tip: Practice 2 rectification problems daily for 1 week!
