RECTIFICATION OF ERRORS AFTER TRIAL BALANCE

Introduction The trial balance is prepared to check the accuracy of the bookkeeping entries. However, errors may
still exist even if the trial balance is balanced. These errors need to be rectified before finalizing the accounts.
Rectification of errors after the trial balance is necessary to ensure the correctness of financial statements.

Types of Errors
1. Errors of Omission

o Definition: When a transaction is completely omitted from the books.

o Example: If a sales transaction is not recorded at all.

o Rectification: Record the missing entry in the appropriate journal (Sales Journal, Purchase Journal, etc.).

2. Errors of Commission

o Definition: When an entry is made incorrectly, but the correct amount is involved.

o Example: Posting an amount to the wrong account, such as posting a payment meant for "Accounts Payable" to "Accounts
Receivable."

o Rectification: Correct the account by passing a journal entry to reverse the wrong entry.

3. Errors of Principle

o Definition: When an accounting principle is violated.

o Example: Classifying a revenue expenditure as a capital expenditure or vice versa.

o Rectification: Pass an adjusting entry to correct the classification.

4. Compensating Errors

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 o Definition: When two errors cancel each other out and thus the trial balance still balances.

o Example: A sales entry is omitted, and an amount is wrongly posted on the other side.

o Rectification: Correct both the errors by passing journal entries for each mistake.

5. Error of Duplication

o Definition: When an entry is made twice for the same transaction.

o Example: A purchase is recorded twice in the books.

o Rectification: Reverse the duplicate entry and correct the account.

Steps for Rectification of Errors After Trial Balance

1. Identify the Type of Error

o Carefully analyze the errors by comparing the trial balance with the ledger.

o Check for any discrepancies in the accounts or balances.

2. Determine the Nature of the Error

o Categorize the error (Omission, Commission, Principle, etc.).

o Understand whether the error affects one or both sides of the trial balance.

3. Make Correcting Journal Entries

o Pass the correct journal entries to rectify the errors identified.

o If both sides of the trial balance are affected, make the necessary adjustments in both accounts.

4. Prepare Corrected Trial Balance

o After rectification, prepare the trial balance again to ensure that the accounts are now correct.
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 o Ensure that the corrected trial balance is balanced and accurate.
S.No. Type of Error Error Rectification
1 Error of Omission Sale of ₹2,000 not recorded. Debit Accounts Receivable ₹2,000; Credit Sales ₹2,000.
2 Error of Omission Purchase of ₹5,000 not recorded. Debit Purchases ₹5,000; Credit Accounts Payable ₹5,000.
Error of ₹1,000 paid to a supplier entered in Purchases Journal
3 Debit Cash ₹1,000; Credit Purchases ₹1,000.
Commission instead of Cash Book.
Error of
4 ₹500 payment to a supplier recorded as ₹5,000. Debit Accounts Payable ₹4,500; Credit Cash ₹4,500.
Commission
Error of ₹3,000 posted to an expense account instead of an income
5 Debit Income ₹3,000; Credit Expense ₹3,000.
Commission account.
Wages paid for machinery installation recorded in Wages
6 Error of Principle Debit Fixed Assets ₹3,000; Credit Wages ₹3,000.
Account.
7 Error of Principle Rent of ₹1,500 treated as an asset. Debit Rent Expense ₹1,500; Credit Rent Asset ₹1,500.
8 Error of Principle Repair expense debited to Purchase Account. Debit Repairs Expense ₹2,000; Credit Purchases ₹2,000.
Error of
9 Sale of ₹1,200 recorded twice. Debit Sales ₹1,200; Credit Accounts Receivable ₹1,200.
Duplication
Error of
10 ₹500 payment to a supplier recorded twice. Debit Accounts Payable ₹500; Credit Cash ₹500.
Duplication
Error of Debit Advertising Expense ₹800; Credit Accounts Payable
11 ₹800 paid for advertising debited to Accounts Payable.
Commission ₹800.
12 Error of Omission ₹3,000 receipt from customer not recorded. Debit Cash ₹3,000; Credit Accounts Receivable ₹3,000.
13 Error of Omission ₹10,000 loan from bank not recorded. Debit Bank ₹10,000; Credit Loan ₹10,000.
Error of
14 ₹2,000 purchase recorded in Sales Account. Debit Purchases ₹2,000; Credit Sales ₹2,000.
Commission
Error of
15 ₹5,000 sale entered in the purchase book. Debit Sales ₹5,000; Credit Purchase ₹5,000.
Commission
Insurance for machinery debited to Insurance Expense Debit Fixed Assets ₹3,000; Credit Insurance Expense
16 Error of Principle
account. ₹3,000.
Debit Repairs Expense ₹1,500; Credit Vehicle Asset
17 Error of Principle Vehicle repairs debited to Vehicle Asset account.
₹1,500.
18 Error of Omission ₹2,000 dividend income not recorded. Debit Bank ₹2,000; Credit Dividend Income ₹2,000.
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S.No. Type of Error Error Rectification
Error of ₹3,000 salary posted to Office Expense Account instead of
19 Debit Salaries ₹3,000; Credit Office Expense ₹3,000.
Commission Salaries Account.
Error of
20 ₹2,500 sales credited to wrong customer’s account. Debit Customer A ₹2,500; Credit Customer B ₹2,500.
Commission
Error of
21 Sale of ₹700 recorded twice. Debit Sales ₹700; Credit Accounts Receivable ₹700.
Duplication
22 Error of Omission ₹1,200 rent payment omitted. Debit Rent Expense ₹1,200; Credit Cash ₹1,200.
Debit Purchase Returns ₹2,500; Credit Accounts Payable
23 Error of Omission ₹2,500 purchase return not recorded.
₹2,500.
24 Error of Principle Office rent debited to Furniture Account. Debit Rent Expense ₹2,000; Credit Furniture ₹2,000.
25 Error of Principle ₹1,500 stationery expense debited to Capital Account. Debit Stationery Expense ₹1,500; Credit Capital ₹1,500.
Error of ₹3,000 payment to a supplier recorded in Accounts Debit Accounts Payable ₹3,000; Credit Accounts
26
Commission Receivable ledger. Receivable ₹3,000.
27 Error of Omission ₹4,000 sale not recorded. Debit Accounts Receivable ₹4,000; Credit Sales ₹4,000.
Error of Payment of ₹6,000 entered in the Purchase Journal instead of
28 Debit Cash ₹6,000; Credit Purchases ₹6,000.
Commission Cash Book.
Error of
29 ₹2,000 sale recorded twice. Debit Sales ₹2,000; Credit Accounts Receivable ₹2,000.
Duplication
30 Error of Principle ₹3,500 repairs expense debited to Fixed Assets account. Debit Repairs Expense ₹3,500; Credit Fixed Assets ₹3,500.
Debit Discount Allowed ₹1,000; Credit Accounts
31 Error of Omission ₹1,000 discount allowed not recorded.
Receivable ₹1,000.
Error of
32 Cash sale of ₹1,200 entered in the Purchases Journal. Debit Cash ₹1,200; Credit Purchases ₹1,200.
Commission
Debit Commission Income ₹2,500; Credit Commission
33 Error of Omission ₹2,500 commission earned not recorded.
Receivable ₹2,500.
Error of Debit Salary Expense ₹3,000; Credit Wages Expense
34 ₹3,000 salary payment recorded in Wages Expense Account.
Commission ₹3,000.
Debit Office Supplies ₹2,000; Credit Capital Expenditure
35 Error of Principle ₹2,000 office supplies classified as a capital expenditure.
₹2,000.
36 Error of Omission ₹5,000 loan repayment not recorded. Debit Loan ₹5,000; Credit Bank ₹5,000.
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S.No. Type of Error Error Rectification
Error of ₹2,000 sales made to a customer entered in the Purchase
37 Debit Sales ₹2,000; Credit Purchase ₹2,000.
Commission Journal.
38 Error of Omission ₹1,500 cash deposit by customer not recorded. Debit Cash ₹1,500; Credit Accounts Receivable ₹1,500.
Error of
39 ₹2,000 expense for office rent recorded as ₹200. Debit Office Rent ₹1,800; Credit Cash ₹1,800.
Commission
40 Error of Principle ₹1,000 commission expense debited to Capital Account. Debit Commission Expense ₹1,000; Credit Capital ₹1,000.

S.No. Wrong Entry Reverse Entry Correct Entry Rectified Entry

Debit Accounts Receivable ₹2,000; Debit Accounts Receivable ₹2,000;
1 Sale of ₹2,000 not recorded. -
Credit Sales ₹2,000. Credit Sales ₹2,000.
Debit Purchases ₹5,000; Credit Debit Purchases ₹5,000; Credit
2 Purchase of ₹5,000 not recorded. -
Accounts Payable ₹5,000. Accounts Payable ₹5,000.
₹1,000 paid to a supplier entered in Debit Purchases ₹1,000; Debit Cash ₹1,000; Credit Debit Cash ₹1,000; Credit
3
Purchases Journal. Credit Cash ₹1,000. Purchases ₹1,000. Purchases ₹1,000.
Debit Accounts Payable Debit Accounts Payable ₹4,500; Debit Accounts Payable ₹4,500;
4 ₹500 payment recorded as ₹5,000.
₹5,000; Credit Cash ₹5,000. Credit Cash ₹4,500. Credit Cash ₹4,500.
₹3,000 posted to an expense Debit Expense ₹3,000; Credit Debit Income ₹3,000; Credit Debit Income ₹3,000; Credit
5
account instead of income. Income ₹3,000. Expense ₹3,000. Expense ₹3,000.
Wages paid for machinery Debit Wages ₹3,000; Credit Debit Fixed Assets ₹3,000; Credit Debit Fixed Assets ₹3,000; Credit
6
installation recorded in Wages. Cash ₹3,000. Wages ₹3,000. Wages ₹3,000.
Debit Rent Asset ₹1,500; Debit Rent Expense ₹1,500; Credit Debit Rent Expense ₹1,500; Credit
7 Rent of ₹1,500 treated as an asset.
Credit Cash ₹1,500. Rent Asset ₹1,500. Rent Asset ₹1,500.
Repair expense debited to Purchase Debit Purchases ₹2,000; Debit Repairs Expense ₹2,000; Debit Repairs Expense ₹2,000;
8
Account. Credit Cash ₹2,000. Credit Purchases ₹2,000. Credit Purchases ₹2,000.
Debit Sales ₹1,200; Credit Debit Sales ₹1,200; Credit Debit Sales ₹1,200; Credit
9 Sale of ₹1,200 recorded twice.
Accounts Receivable ₹1,200. Accounts Receivable ₹1,200. Accounts Receivable ₹1,200.
₹500 payment to a supplier Debit Accounts Payable ₹500; Debit Accounts Payable ₹500; Debit Accounts Payable ₹500;
10
recorded twice. Credit Cash ₹500. Credit Cash ₹500. Credit Cash ₹500.

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S.No. Wrong Entry Reverse Entry Correct Entry Rectified Entry
₹800 paid for advertising recorded Debit Accounts Payable ₹800; Debit Advertising Expense ₹800; Debit Advertising Expense ₹800;
11
in Accounts Payable. Credit Cash ₹800. Credit Accounts Payable ₹800. Credit Accounts Payable ₹800.
₹3,000 receipt from customer not Debit Accounts Receivable Debit Cash ₹3,000; Credit Accounts Debit Cash ₹3,000; Credit Accounts
12
recorded. ₹3,000; Credit Sales ₹3,000. Receivable ₹3,000. Receivable ₹3,000.
₹10,000 loan from bank not Debit Cash ₹10,000; Credit Debit Bank ₹10,000; Credit Loan Debit Bank ₹10,000; Credit Loan
13
recorded. Loan ₹10,000. ₹10,000. ₹10,000.
₹2,000 purchase recorded in Sales Debit Sales ₹2,000; Credit Debit Purchases ₹2,000; Credit Debit Purchases ₹2,000; Credit
14
Account. Purchases ₹2,000. Sales ₹2,000. Sales ₹2,000.
₹5,000 sale entered in the purchase Debit Purchase ₹5,000; Credit Debit Sales ₹5,000; Credit Purchase Debit Sales ₹5,000; Credit Purchase
15
book. Accounts Payable ₹5,000. ₹5,000. ₹5,000.
Insurance for machinery debited to Debit Insurance Expense Debit Fixed Assets ₹3,000; Credit Debit Fixed Assets ₹3,000; Credit
16
Insurance Expense. ₹3,000; Credit Bank ₹3,000. Insurance Expense ₹3,000. Insurance Expense ₹3,000.
Vehicle repairs debited to Vehicle Debit Vehicle Asset ₹1,500; Debit Repairs Expense ₹1,500; Debit Repairs Expense ₹1,500;
17
Asset account. Credit Cash ₹1,500. Credit Vehicle Asset ₹1,500. Credit Vehicle Asset ₹1,500.
₹2,000 dividend income not Debit Bank ₹2,000; Credit Debit Bank ₹2,000; Credit Debit Bank ₹2,000; Credit
18
recorded. Dividend Income ₹2,000. Dividend Income ₹2,000. Dividend Income ₹2,000.
₹3,000 salary posted to Office Debit Office Expense ₹3,000; Debit Salaries ₹3,000; Credit Office Debit Salaries ₹3,000; Credit Office
19
Expense Account. Credit Cash ₹3,000. Expense ₹3,000. Expense ₹3,000.
₹2,000 sale credited to wrong Debit Customer A ₹2,000; Debit Customer A ₹2,000; Credit Debit Customer A ₹2,000; Credit
20
customer’s account. Credit Customer B ₹2,000. Customer B ₹2,000. Customer B ₹2,000.
Debit Sales ₹700; Credit Debit Sales ₹700; Credit Accounts Debit Sales ₹700; Credit Accounts
21 Sale of ₹700 recorded twice.
Accounts Receivable ₹700. Receivable ₹700. Receivable ₹700.
Debit Rent Expense ₹1,200; Debit Rent Expense ₹1,200; Credit Debit Rent Expense ₹1,200; Credit
22 ₹1,200 rent payment omitted.
Credit Cash ₹1,200. Cash ₹1,200. Cash ₹1,200.
₹2,500 purchase return not Debit Purchase ₹2,500; Credit Debit Purchase Returns ₹2,500; Debit Purchase Returns ₹2,500;
23
recorded. Accounts Payable ₹2,500. Credit Accounts Payable ₹2,500. Credit Accounts Payable ₹2,500.
Office rent debited to Furniture Debit Furniture ₹2,000; Credit Debit Rent Expense ₹2,000; Credit Debit Rent Expense ₹2,000; Credit
24
Account. Cash ₹2,000. Furniture ₹2,000. Furniture ₹2,000.
₹1,500 stationery expense debited Debit Capital ₹1,500; Credit Debit Stationery Expense ₹1,500; Debit Stationery Expense ₹1,500;
25
to Capital Account. Cash ₹1,500. Credit Capital ₹1,500. Credit Capital ₹1,500.

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S.No. Wrong Entry Reverse Entry Correct Entry Rectified Entry
₹3,000 payment to a supplier
Debit Accounts Receivable Debit Accounts Payable ₹3,000; Debit Accounts Payable ₹3,000;
26 recorded in Accounts Receivable
₹3,000; Credit Sales ₹3,000. Credit Accounts Receivable ₹3,000. Credit Accounts Receivable ₹3,000.
ledger.
Debit Sales ₹4,000; Credit Debit Accounts Receivable ₹4,000; Debit Accounts Receivable ₹4,000;
27 ₹4,000 sale not recorded.
Accounts Receivable ₹4,000. Credit Sales ₹4,000. Credit Sales ₹4,000.
₹6,000 payment entered in the Debit Purchase ₹6,000; Credit Debit Cash ₹6,000; Credit Debit Cash ₹6,000; Credit
28
Purchase Journal. Cash ₹6,000. Purchases ₹6,000. Purchases ₹6,000.
Debit Sales ₹2,000; Credit Debit Sales ₹2,000; Credit Debit Sales ₹2,000; Credit
29 ₹2,000 sale recorded twice.
Accounts Receivable ₹2,000. Accounts Receivable ₹2,000. Accounts Receivable ₹2,000.
₹3,500 repairs expense debited Debit Fixed Assets ₹3,500; Debit Repairs Expense ₹3,500; Debit Repairs Expense ₹3,500;
30
Fixed Assets. Credit Cash ₹3,500. Credit Fixed Assets ₹3,500. Credit Fixed Assets ₹3,500.
₹1,000 discount allowed not Debit Discount Allowed Debit Discount Allowed ₹1,000; Debit Discount Allowed ₹1,000;
31
recorded. ₹1,000; Credit Sales ₹1,000. Credit Accounts Receivable ₹1,000. Credit Accounts Receivable ₹1,000.
Cash sale of ₹1,200 entered in Debit Purchases ₹1,200; Debit Cash ₹1,200; Credit Sales Debit Cash ₹1,200; Credit Sales
32
Purchases Journal. Credit Cash ₹1,200. ₹1,200. ₹1,200.
₹5,000 discount given to customer Debit Accounts Receivable Debit Discount Allowed ₹5,000; Debit Discount Allowed ₹5,000;
33
omitted. ₹5,000; Credit Sales ₹5,000. Credit Accounts Receivable ₹5,000. Credit Accounts Receivable ₹5,000.
₹500 electricity bill entered in Debit Repairs ₹500; Credit Debit Utilities Expense ₹500; Debit Utilities Expense ₹500;
34
Repairs Account. Cash ₹500. Credit Repairs ₹500. Credit Repairs ₹500.
₹8,000 sale debited to Office Debit Office Expense ₹8,000; Debit Sales ₹8,000; Credit Office Debit Sales ₹8,000; Credit Office
35
Expenses Account. Credit Sales ₹8,000. Expense ₹8,000. Expense ₹8,000.
Machinery purchase recorded as an Debit Expense ₹5,000; Credit Debit Fixed Assets ₹5,000; Credit Debit Fixed Assets ₹5,000; Credit
36
expense. Cash ₹5,000. Expense ₹5,000. Expense ₹5,000.
₹1,500 paid for rent recorded as Debit Rent ₹15,000; Credit Debit Rent ₹1,500; Credit Cash Debit Rent ₹1,500; Credit Cash
37
₹15,000. Cash ₹15,000. ₹1,500. ₹1,500.
₹7,500 loan received entered in Debit Sales ₹7,500; Credit Debit Loan ₹7,500; Credit Cash Debit Loan ₹7,500; Credit Cash
38
Sales. Loan ₹7,500. ₹7,500. ₹7,500.
Insurance premium recorded as Debit Capital ₹3,000; Credit Debit Insurance Expense ₹3,000; Debit Insurance Expense ₹3,000;
39
Capital Expense. Cash ₹3,000. Credit Capital ₹3,000. Credit Capital ₹3,000.
Bank interest recorded as Sale Debit Sales ₹2,000; Credit Debit Bank Interest ₹2,000; Credit Debit Bank Interest ₹2,000; Credit
40
Income. Cash ₹2,000. Cash ₹2,000. Cash ₹2,000.
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