rectification error short cut forumla
Answers
When the trial balance tallies it provides us only with the proof of the arithmetical accuracy of the ledger accounts. However, there may still be some errors present. Some errors affect the trial balance while some do not. When the trial balance does not tally, it is a clear indication of the presence of errors. We need to identify and locate these errors. Thus, after locating them Rectification of Errors is also necessary.
Rectification of Errors
On the basis of rectification of errors, we can classify the errors into the following two broad categories:
Errors not affecting the Trial Balance
Errors affecting the Trial Balance
The errors need to be categorized in these categories because we can usually rectify the errors not affecting the trial balance by passing a rectification journal entry. While the errors affecting the trial balance affect only one account and for these, we cannot pass a journal entry. However, we can pass a journal entry only by opening a Suspense A/c.
Rectification of Errors not affecting the Trial Balance
These errors affect two or more accounts simultaneously. Thus, these are two-sided errors. We can rectify these by passing a journal entry giving the correct debit and credit to the accounts. In order to rectify an error, we need to cancel the effect of wrong debit or credit by reversing it and restore the effect of correct debit or credit.
When there is short debit or excess credit in an account we need to debit the concerned account. Whereas, when there is short credit or excess debit in an account we need to credit the concerned account.
Complete omission to record an entry in the journal or the subsidiary books, incorrect recording of transactions in the books, complete omission of posting and errors of principle are the examples of these errors.
Rectification of Errors affecting the Trial Balance
These errors affect only one account. Thus, these are one-sided errors. We can rectify these errors by giving an explanatory note in the account or by passing a journal entry with the help of Suspense A/c. When we detect an error before posting to the ledger, we can correct it by simply crossing the wrong amount, writing the correct amount above it and initializing it. Similarly, we can also correct an error in the ledger account.
Rectification of Errors affecting the Trial Balance
These errors affect only one account. Thus, these are one-sided errors. We can rectify these errors by giving an explanatory note in the account or by passing a journal entry with the help of Suspense A/c. When we detect an error before posting to the ledger, we can correct it by simply crossing the wrong amount, writing the correct amount above it and initializing it. Similarly, we can also correct an error in the ledger account.
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Answer:
The errors by which there is no change on both side of trial balance or wrong effect on trial balance with same amount will not lead to effect on agreement of Trial Balance. Errors of omission, error of posting with wrong amount on both side, or Error of principles are the example of such errors. To find out such errors is a challenging job for any book keeper or an accountant.