Rectification of Error

Accounting Process
Recording
Journal Entries are passengers
Departure Plane
The Airplane- the Ledger
Airplane Destination

Profit & Loss Balance

Sheet
 Trial Balance
Serial No Account title Debit credit
1 cash 3800
2 capital 5000
3 Furniture 500
4 Equipment 700
5 Purchase 3000
6 Sale 2500
7 Jack 3000
8 Hwakins 2500
Total 10500 10500
Aeroplane wont takeoff
VIP Movement (Adjustments)
Virus in data
Two Kind Of virus

Silent Killer
Easily Detectable
Type Of Accounting Errors
Not Affecting Trial
Affecting Trial Balance Balance
Error Affecting Trial Balance
Error Not Affecting Trial
Balance
The Real Myth ????
Accounting Error or
Duality Fraud
Two Type of errors
Error Classification
Rectifying a entry
To Paint Bulls Eye on back
Rectifying it through entry

Debit Credit

100 200

100 200

300 100
Error of accounting Mechanism
Steps In Rectifying
 Figure out where did you go wrong
 Reverse your Mistake
 Perform the part that was omitted
 Problem Rectified
Errors of omission

 where a transaction is completely omitted from the books

Error Of Omission
Error Of Omission
 Purchase of stationary for cash $ 7000 was completely
omitted from books of accounts
What Actually Happened What should have Happened Rectification

NIL
Debit Stationary 7000 Debit Stationary 7000
Credit Cash 7000 Credit Cash 7000
Errors of commission
 this type of error occurs when the correct amount is entered
but in the wrong person’s account
Error Of Commission
Error of commission
 Cash payment of RS 3000 received from a debtor Haji Nasir
has been correctly debited to cash but wrongly credited to
Haji Nisar account.
What Actually Happened What should have Happened Rectification
Debit Cash 3000
Credit Haji Nisar 3000

Debit cash 3000

Credit Haji Nasir 3000 Debit Haji Nisar 3000
Credit Haji Nasir 3000
Errors of principle

 where an item is entered in the wrong class of account

Error Of Principle
Error Of Principle
 A purchase of machine from Alpha Equipment worth $30,000
has been incorrectly debited to Drawings Account but
correctly credited to Alpha Equipment
What Actually Happened What should have Happened Rectification
Debit Drawings 30,000
Credit Alpha Equipment 30,000

Debit Machine 30,000

Credit Alpha Equipment 3000

Debit Machine 30,000

Credit Drawings 30,000
Complete reversal
 where the correct accounts are used but each item is shown
on the wrong side of the account
Error Of Complete reversal
Error of complete Reversal
 A cash payment made to Darwin Ducks amounting to RS
90,000 have been wrongly debited to cash account and
wrongly credited to Darwin Ducks.
What Actually Happened What should have Happened Rectification
Debit Cash 90,000 Debit Darwin Ducks 90,000
Credit Darwin Ducks90,000 Credit cash 90,000

Debit Darwin Ducks 90,000

Credit cash 90,000
Debit Darwin Ducks 90,000
Credit cash 90,000
Debit Darwin Ducks 180,000
Credit cash 180,000
Numerical Error
Step in Rectifying Numerical
Error
Overstatement Understatement
Make a Reversal Entry with the Repeat the same entry with the
Excess Amount Deficient Amount
Errors of original entry
 where the original figure is incorrect, yet double entry is still
 observed using this incorrect figure.
Error Of origin
Error Of Origin
 A credit sale of $ 1000 to Marvin Cole has been recorded to
an amount of $ 3000
What Actually Happened What should have Happened Rectification
Debit Marvin Cole3000
Credit Sale 3000
Debit Marvin Cole 1000
Credit Sale 1000

Debit Sale 2000

Credit Marvin Cole 2000
Transposition errors
 where the wrong sequence of the individual characters within
a number was entered.
Error Of Transposition
Error of Transposition
 A Purchase return of 52,000 from Venus Park has been
entered as 25,000.
What Actually Happened What should have Happened Rectification
Debit Venus Park 25,000
Credit Purchase Return 25,000
Debit Venus Park 52,000
Credit Purchase Return 52,000

Debit Venus Park 27,000

Credit Purchase Return 27,000
Compensating errors
 where errors cancel each other out.
Error Of Compensation
Error of Compensation
 Sale of Goods have been overstated to an amount $500
and Purchase of Goods have also been Overstated to an
amount $500
Rectification
Debit Sale 500
Credit Purchase 500
 Purchase 500
 Sale 500