TYPES OF ERRORS 1 Errors of Omission 2

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TYPES OF ERRORS (1) Errors of Omission (2) Errors of Commission (4) Compensating Errors

TYPES OF ERRORS (1) Errors of Omission (2) Errors of Commission (4) Compensating Errors (3) Errors of Principal Treating a revenue expenditure as capital expenditure or vice versa or treating the sale of a fixed assets as ordinary sale. Trial Balance will still agree. Omitting an entry completely from subsidiary books. Trial Balance will still agree. Writing the wrong amount in the subsidiary books. Trial Balance will agree. These are errors that cancel each other, e. g. , under posting of the Purchase Journal may be compensated or cancelled out with the under casting of the Sales Journal by a similar amount. Trial Balance agree. Omitting to post the ledger Account from the subsidiary Book. Trial Balance will not agree. Posting an amount in the wrong account but on the correct side. Trial Balance will still agree. Wrong casting of subsidiary books. Posting the wrong amount in the Ledger. Posting an amount on the wrong side. Wrong balancing of an account. Trial Balance will not agree. Shri Krishna Education visit us at www. accountsshikshak. com 1

Error of Omission Complete Omission Example Goods purchased from Mr Karan, not recorded in

Error of Omission Complete Omission Example Goods purchased from Mr Karan, not recorded in books Rectified entry will be: Purchased a/c Dr. To Karan (Being goods purchased from Karan) Shri Krishna Education visit us at www. accountsshikshak. com 2

Partial Omission Example Goods Sold to Ms Divya , not posted to her account

Partial Omission Example Goods Sold to Ms Divya , not posted to her account Correct entry should be: Divya a/c To Sales (Being goods sold to Divya) Dr. Wrong entry is: To Sales Dr. Rectify entry should be: Divya a/c Dr. To Suspense (Being rectified entry passed for omission of Divya’s a/c) Shri Krishna Education visit us at www. accountsshikshak. com 3

Error of Principle Example: Wages paid for construction of building were debited to wages

Error of Principle Example: Wages paid for construction of building were debited to wages a/c Correct entry should be: Building a/c Dr. To cash (Being wages paid for construction of building) Wrong entry is: Wages a/c To Cash a/c Dr. Rectify entry should be: Building a/c Dr. To wages a/c (Being rectified entry passed for wrong a/c debited) Shri Krishna Education visit us at www. accountsshikshak. com 4

Error of Commission Wrong amount written in subsidiary books Example Goods Sold to Ms

Error of Commission Wrong amount written in subsidiary books Example Goods Sold to Ms Sanjukta for `. 5, 000 , recorded in sales book as Rs. 500 Correct entry should be: 4, 500 Sanjukta a/c Dr. 5, 000 To Sales (Being goods sold to sanjukta for Rs. 5, 000) 4, 500 5, 000 Wrong entry is: Sanjukta a/c To Sales Dr. 500 Rectify entry should be: Sanjukta a/c Dr. 4, 500 To Sales a/c 4, 500 (Being rectified entry passed for wrong amount written in sales book) Shri Krishna Education visit us at www. accountsshikshak. com 5

Posting an amount in wrong account but on correct side Example Paid cartage for

Posting an amount in wrong account but on correct side Example Paid cartage for `. 5, 000 , for purchase of furniture, were posted to cartage a/c Correct entry should be: Furniture a/c Dr. 5, 000 To Cash (Being cartage for purchase of furniture Rs. 5, 000) 5, 000 Wrong entry is: Cartage a/c To Cash Dr. 5, 000 Rectify entry should be: Furniture a/c Dr. 5, 000 To Cartage a/c 5, 000 (Being rectified entry passed for recording of wrong account) Shri Krishna Education visit us at www. accountsshikshak. com 6

Sales Book Purchase Book Sales Return Book Purchase Return Book Dr (-) Dr (+)

Sales Book Purchase Book Sales Return Book Purchase Return Book Dr (-) Dr (+) Dr (-) Cr (+) Cr (-) Cr (+) Shri Krishna Education visit us at www. accountsshikshak. com 7

Wrong casting of subsidiary book Example (a) Sales book was under cast by `.

Wrong casting of subsidiary book Example (a) Sales book was under cast by `. 2, 000 Rectify entry should be: Suspense a/c Dr. 2, 000 To Sales a/c 2, 000 (Being rectified entry passed for under casting of sales book) (b) Purchases book was under cast by Rs. 1, 500 Rectify entry should be: Purchases a/c Dr. 1, 500 To Suspense a/c 1, 500 (Being rectified entry passed for under casting of purchases book) 8

Posting an wrong amount in the ledger Example Paid cartage for `. 5, 000

Posting an wrong amount in the ledger Example Paid cartage for `. 5, 000 , for purchase of furniture, were posted to furniture a/c as `. 500 Correct entry should be: 4, 500 5, 000 Furniture a/c Dr. To Cash (Being cartage for purchase of furniture Rs. 5, 000) 5, 000 Wrong entry is: Furniture a/c To Cash Dr. 500 5, 000 Rectify entry should be: Furniture a/c Dr. 4, 500 To Suspense a/c 4, 500 (Being rectified entry passed for recording of wrong amount) 9

Posting an amount on wrong side Example Paid cartage for `. 5, 000 ,

Posting an amount on wrong side Example Paid cartage for `. 5, 000 , for purchase of furniture, were credited to furniture a/c Correct entry should be: Furniture a/c Dr. 5, 000 To Cash (Being cartage for purchase of furniture Rs. 5, 000) 5, 000 Wrong entry is: To Furniture a/c To Cash 5, 000 Rectify entry should be: Furniture a/c Dr. 10, 000 To Suspense a/c 10, 000 (Being rectified entry passed for recording of wrong side ) Shri Krishna Education visit us at www. accountsshikshak. com 10

Some more Examples Bills receivable received from Z for `. 2, 000 were passed

Some more Examples Bills receivable received from Z for `. 2, 000 were passed through Bills payable book, although Z’s a/c was correctly credited Correct entry should be: Bills receivable a/c To Z (Being bill received from Z) Dr. 2, 000 Wrong entry is: To Bills payable a/c To Z 2, 000 Rectify entry should be: Bills receivable a/c Dr. 2, 000 Bills payable a/c Dr. 2, 000 To Suspense a/c 4, 000 (Being rectified entry passed for recording of wrong side ) Shri Krishna Education visit us at www. accountsshikshak. com 11

Purchase of Machinery for `. 6, 500 were recorded in purchase book as Rs.

Purchase of Machinery for `. 6, 500 were recorded in purchase book as Rs. 5, 600 Correct entry should be: Machinery a/c Dr. To Creditor a/c (Being machinery purchased from creditor) 6, 500 900 6, 500 Wrong entry is: Purchases a/c Dr. To Creditor a/c 5, 600 Rectify entry should be: Machinery a/c Dr. 6, 500 To Purchases a/c 5, 600 To Creditor a/c 900 (Being rectified entry passed for recording in wrong book with wrong amount ) Shri Krishna Education visit us at www. accountsshikshak. com 12

A sum of `. 200 for drawings on the credit side of cash book

A sum of `. 200 for drawings on the credit side of cash book were not recorded in Drawings a/c. Correct entry should be: Drawings a/c Dr. To Cash a/c (Being cash withdrawn by proprietor ) 200 Wrong entry is: -To Cash a/c 200 Rectify entry should be: Drawings a/c Dr. 200 To Suspense a/c 200 (Being rectified entry passed for not recording in Drawings a/c ) Shri Krishna Education visit us at www. accountsshikshak. com 13

A cheque of `. 5, 000 received from Anuj was dishonored and debited to

A cheque of `. 5, 000 received from Anuj was dishonored and debited to discount a/c Correct entry should be: Anuj a/c Dr. 5, 000 To Bank a/c (Being cheque dishonored, received from Anuj ) 5, 000 Wrong entry is: Discount a/c Dr. To Bank a/c 5, 000 Rectify entry should be: Anuj a/c Dr. 5, 000 To Discount a/c 5, 000 (Being rectified entry passed for recording in wrong account ) Shri Krishna Education visit us at www. accountsshikshak. com 14

An amount of `. 5, 000 due from Komal, which was written off as

An amount of `. 5, 000 due from Komal, which was written off as bad debt in prevous year, was unexpectedly recovered and has been posted to Varnika a/c Correct entry should be: Cash a/c Dr. 5, 000 To bad debt recovered a/c 5, 000 (Being cash received from komal which was written off as bad debt last year) Wrong entry is: Cash a/c Dr. To Varnika a/c 5, 000 Rectify entry should be: Varnika a/c Dr. 5, 000 To Bad debt recovered a/c 5, 000 (Being rectified entry passed for recording in wrong account ) Shri Krishna Education visit us at www. accountsshikshak. com 15

Preparation of suspense a/c During the course of accounting year, the accountant prepared a

Preparation of suspense a/c During the course of accounting year, the accountant prepared a trial balance which does not match. (excess credit over debit by Rs. 700). He put the difference in a suspense a/c. Rectified entries Divya a/c Dr. 2, 000 To Suspense (Being rectified entry passed for omission of Divya’s a/c) 2, 000 Varnika a/c Dr. 5, 000 To Bad debt recovered a/c 5, 000 (Being rectified entry passed for recording in wrong account ) Drawings a/c Dr. 200 To Suspense a/c 200 (Being rectified entry passed for not recording in Drawings a/c ) Bills receivable a/c Dr. 2, 000 Bills payable a/c Dr. 2, 000 To Suspense a/c (Being rectified entry passed for recording of wrong side ) 4, 000 16

Furniture a/c Dr. 5, 000 Suspense a/c Dr. 500 To Cartage a/c 5, 500

Furniture a/c Dr. 5, 000 Suspense a/c Dr. 500 To Cartage a/c 5, 500 (Being rectified entry passed for recording of wrong account with wrong amount) Suspense a/c Dr. 5, 000 To Furniture a/c 5, 000 (Being rectified entry passed for recording of wrong side ) Dr. Particulars To balance b/d To Cartage To Furniture a/c Suspense a/c Amount Particulars Cr. Amount 700 By Divya 500 By Drawings 5, 000 By Bills payable By Bills receivable a/c 2, 000 2, 000 6, 200 17

Prepared by Ashwani Sharma, For Shri Krishna Education visit us at www. accountsshikshak. com

Prepared by Ashwani Sharma, For Shri Krishna Education visit us at www. accountsshikshak. com 18

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