Question 2:
(a) The books of Dev Verma could not tallied. The accountant transferred the difference of 31,270 in the
suspense account on the debit side. The following mistakes were found later on rectify the errors by
passing journal entries and prepare suspense account.:
The Purchase of 400 from Saran was entered into sales book but Saran's personal account was
correctly credited.
(ii) The sale of 430 to Ramdas were credited in his account as 340.
(iii) The sale of old furniture of 540 was credited to sales account as 450.
(iv) Goods worth 100 were taken by the proprietor which was not recorded.
(v) The Sales of 296 to Kishan was entered in sales book as 269.
[10 mark
(vi) Sales return book balance of 210 was not included in the accounts.
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Rectification of Errors
Rectification of Errors
Errors are mistakes that we commit while giving accounting treatment either knowingly or unknowingly. An error may be clerical or Error of principle. There are various stages at which an accountant and bookkeeper may commit errors. Rectification of error is very important to know the true financial position of an entity at the close of the financial year.
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Rectification of Error
Maintaining the books of accounts is a continuous process. Every entity wants to know its true financial position at the end of the respected financial year.
One shall not correct the errors by overwriting. If after making an entry we find that an error has been committed then it can be corrected by crossing the incorrect entry and making a correct entry.
However, if the errors are located after some time then correction should be made by making a rectification entry. Rectification of errors depends on the stage at which it committed and detected.
We may detect an error at any of the stages as given below:
Before preparation of trial balance.
After preparing the trial balance but before preparation of final accounts.
After the preparation of final accounts i.e. in the next accounting period.