Errors

WELCOME TO PPT

Presented by

SHINY PRATAP

Commerce option

BNVCTE

DETECTION & RECTIFICATION OF ERRORS

CONTENT

• Types of errors• Clerical error• Errors of principle• Detection of errors• Classification of errors based on

rectification• Error disclosed by trial balance• Errors not disclosed by trial balance• Rectification of errors• Rectification entries

TYPES OF ERRORS

Clerical Errors

Error Of Principle

Errors

CLERICAL ERRORS

Errors of Omission

Errors of Commission

Compensating Errors

Complete omission

Partial omission

Mistakes committed by accounting staff

Errors occurred to neutralize another error

ERRORS OF PRINCIPLE

Occurs when the accounting principles are violated in recording transactions

The trial balance remain unaffected

DETECTION OF ERRORS

• Trial balance does not tally

• Balancing of various accounts to be checked

• Posting to various accounts to be verified

• Debit and credit aspects in entries to be checked

• Source documents to be verified

For the purpose of rectification : Errors are classified as

Errors disclosed by Trial Balance (One sided errors)

Errors not disclosed by Trial Balance

(Two sided errors)

ERRORS DISCLOSED BY TRIAL

BALANCE

• Omission to post an amount into ledger

• Omission to post an amount in the trial balance

• Posting an amount in the wrong side of an account

• Posting of a wrong amount in ledger

• Wrong totalling or balancing of accounts

• Wrong totalling of subsidiary books

ERRORS NOT DISCLOSED BY TRIAL BALANCE

• Complete omission of a transaction in the books of original entry

• Entering a wrong amount in the subsidiary books

• Posting of an amount in the wrong account

• Compensating errors

• Errors of principle

RECTIFICATION OF ERRORS

• Errors should not be corrected by over

writing• Any error detected after preparing

final accounts need to be crossed out and corrected by making fresh entry

• Any error detected after preparing final accounts can be corrected by rectification entries

RECTIFICATION ENTRIES• ONE SIDED EROR • No need for rectification

entries• Neutralise the effect of error

by noting the correction

TWO SIDED ERROR Rectification entries required Cancelling the effect of

wrong debit or credit by reversing the entry

Restoring the effect of correct debit or credit

THANK YOU