Question: 

What is Rectification of error?

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BeingSkilled's picture

Rectification of error – In accounting, every monetary transaction is recorded. At times, the entries goes to wrong head or they are missed and that’s when we fix those through the concept of Rectification of Error.

How to rectify the errors?

There are two types of errors which are as follows:
Error of Omission – This is the common type of error in which the event is escaped from getting recorded. This means that though the event happened, we didn’t record it.
For example, the bank charges were deducted without our knowledge but they didn’t mention it in the statements. This is Error of Omission.

Error of Commission – When event has happened, is even classified and recorded correctly but in the wrong classification. For example: When A payment to Mr. Ram is the debtor, is recorded in the account of Mr. Shyam who is also a debtor. This classification is correct but entry is posted in wrong account.

Error of Principle : When errors in which entry is recorded in the wrong class of account. Purchase of fixed asset is recorded in the expense account.

Error of Original Entry : When errors happened in the figures as for example a receipt of INR 50,000 from debtor is recorded as INR 5000 in his account.

1. Errors can be rectified by passing opposite entries to erroneous entry and whenever there is the error of omission, we pass the omitted transaction.

In the first case,

Paid INR 15000 for advertisement but debited to electricity expenses so we have to credit it from electricity expense and debit it to the advertisement account.

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Date

Particular

LF

Debit

Credit

 

Advertisement A/c ..........Dr

 

15000

 
 

To electricity account

   

15000

2. In this cash sales entry of INR 250000 is omitted and therefore we can to pass the correct entry.

Date

Particular

LF

Debit

Credit

 

To Cash A/c ... Dr

 

250000

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To Sales A/c

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250000