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what is rettification of error?

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what is rettification of error? ..

Answer / idea compouters(tally academy)

Error mean mistake. If you are prepared accounts, the
mistake will come journal, ledger & trailbalance. First we
are identified the mistake and that mistake adjusted or
recitified.
For example:
Purchases goods for cash Rs 1000/-

The journal entry is

Purchase A/c ...Dr 1000
To cash A/c 1000

But posting in the ledger accounts, we are posted in
Purchase a/c only 100/-. the 900/- is missed in purchases
a/c. like this type of errors, rectified called as
recitfication of errors.

Is This Answer Correct ?    29 Yes 4 No

what is rettification of error? ..

Answer / aparichithudu

All types of errors in accounts can be rectified at two
stages:

(i) before the preparation of the final accounts; and

(ii) after the preparation of final accounts.

Errors rectified within the accounting period

The proper method of correction of an error is to pass
journal entry in such a way that it corrects the mistake
that has been committed and also gives effect to the entry
that should have been passed. But while errors are being
rectified before the preparation of final accounts, in
certain cases the correction can't be done with the help of
journal entry because the errors have been such. Normally,
the procedure of rectification, if being done, before the
preparation of final accounts is as follows:

(a) Correction of errors affecting one side of one account
Such errors do not let the trial balance agree as they
effect only one side of one account so these can't be
corrected with the help of journal entry, if correction is
required before the preparation of final accounts. So
required amount is put on debit or credit side of the
concerned account, as the case maybe. For example:

(i) Sales book under cast by Rs. 500 in the month of
January. The error is only in sales account, in order to
correct the sales account, we should record on the credit
side of sales account 'By under casting of. sales book for
the month of January Rs. 500".I'Explanation:As sales book
was under cast by Rs. 500, it means all accounts other than
sales account are correct, only credit balance of sales
account is less by Rs. 500. So Rs. 500 have been credited
in sales account.

(ii) Discount allowed to Marshall Rs. 50, not posted to
discount account. It means that the amount of Rs. 50 which
should have been debited in discount account has not been
debited, so the debit side of discount account has been
reduced by the same amount. We should debit Rs. 50 in
discount account now, which was omitted previously and the
discount account shall be corrected.

(iil) Goods sold to X wrongly debited in sales account.
This error is effecting only sales account as the amount
which should have been posted on the credit side has been
wrongly placed on debit side of the same account. For
rectifying it, we should put double the amount of
transaction on the credit side of sales account by
writing "By sales to X wrongly debited previously."

(iv) Amount of Rs. 500 paid to Y, not debited to his
personal account. This error of effecting the personal
account of Y only and its debit side is less by Rs. 500
because of omission to post the amount paid. We shall now
write on its debit side. "To cash (omitted to be posted)
Rs. 500.

Correction of errors affecting two sides of two or more
accounts

As these errors affect two or more accounts, rectification
of such errors, if being done before the preparation of
final accounts can often be done with the help of a journal
entry. While correcting these errors the amount is debited
in one account/accounts whereas similar amount is credited
to some other account/ accounts.

Correction of errors in next accounting period

As stated earlier, that it is advisable to locate and
rectify the errors before preparing the final accounts for
the year. But in certain cases when after considerable
search, the accountant fails to locate the errors and he is
in a hurry to prepare the final accounts, of the business
for filing the return for sales tax or income tax purposes,
he transfers the amount of difference of trial balance to a
newly opened 'Suspense Account'. In the next accounting
period, as and when the errors are located these are
corrected with reference to suspense account. When all the
errors are discovered and rectified the suspense account
shall be closed automatically. We should not forget here
that only those errors which effect the totals of trial
balance can be corrected with the help of suspense account.
Those errors which do not effect the trial balance can't be
corrected with the help of suspense account. For example,
if it is found that debit total of trial balance was less
by Rs. 500 for the reason that Wilson's account was not
debited with Rs. 500, the following rectifying entry is
required to be passed.

Difference in trial balance

Trial balance is affected by only errors which are
rectified with the help of the suspense account. Therefore,
in order to calculate the difference in suspense account a
table will be prepared. If the suspense account is debited
in' the rectification entry the amount will be put on the
debit side of the table. On the other hand, if the suspense
account is credited, the amount will be put on the credit
side of the table. In the end, the balance is calculated
and is reversed in the suspense account. If the credit side
exceeds, the difference would be put on the debit side of
the suspense account. Effect of Errors of Final Accounts

1. Errors effecting profit and loss account

It is important to note the effect that an en-or shall have
on net profit of the firm. One point to remember here is
that only those accounts which are transferred to trading
and profit and loss account at the time of preparation of
final accounts effect the net profit. It means that only
mistakes in nominal accounts and goods account will effect
the net profit. Error in the these accounts will either
increase or decrease the net profit.

How the errors or their rectification effect the profit-
following rules are helpful in understanding it :

(i) If because of an error a nominal account has been given
some debit the profit will decrease or losses will
increase, and when it is rectified the profits will
increase and the losses will decrease. For example,
machinery is overhauled for Rs. 10,000 but the amount
debited to machinery repairs account -this error will
reduce the profit. In rectifying entry the amount shall be
transferred to machinery account from machinery repairs
account, and it will increase the profits.

(il) If because of an error the amount is omitted from
recording on the debit side of a nominal account-it results
in increase of profits or decrease in losses. The
rectification of this error shall have reverse effect,
which means the profit will be reduced and losses will be
increased. For example, rent paid to landlord but the
amount has been debited to personal account of landlord-it
will increase the profit as the expense on rent is reduced.
When the error is rectified, we will post the necessary
amount in rent account which will increase the expenditure
on rent and so profits will be reduced.

(iil) Profit will increase or losses will decrease if a
nominal account is wrongly credited. With the rectification
of this error, the profits will decrease and losses will
increase. For example, investments were sold and the amount
was credited to sales account. This error will increase
profits (or reduce losses) when the same error is rectified
the amount shall be transferred from sales account to
investments account due to which sales will be reduced
which will result in decrease in profits (or increase in
losses).

(iv) Profit will decrease or losses will increase if an
account is omitted from posting in the credit side of a
nominal or goods account. When the same will be rectified
it will increase the profit or reduce the losses. For
example, commission received is omitted to be posted to the
credit of commission account. This error will decrease
profits ( or increase losses) as an income is not credited
to profit and loss account. When the error will be
rectified, it will have reverse effect on profit and loss
as an additional income will be credited to profit and loss
account so the profit will increase ( or the losses will
decrease). If due to any error the profit or losses are
effected, it will have its effect on capital account also
because profits are credited and losses are debited in the
capital account and so the capital shall also increase or
decrease. As capital is shown on the liabilities side of
balance sheet so any error in nominal account will effect
balance sheet as well. So we can say that an error in
nominal account or goods account effects profit and loss
account as well as balance sheet.

2. Errors effecting balance sheet only

If an error is committed in a real or personal account, it
will effect assets, liabilities, debtors or creditors of
the firm and as a result it will have its impact on balance
sheet alone. because these items are shown in balance sheet
only and balance sheet is prepared after the profit and
loss account has been prepared. So if there is any error in
cash account, bank account, asset or liability account it
will effect only balance sheet.

Is This Answer Correct ?    5 Yes 4 No

what is rettification of error? ..

Answer / ali

Hi,
Aparichithudu you have given good answre but that much long
answer not necessary. I appreciate your.

Is This Answer Correct ?    2 Yes 1 No

what is rettification of error? ..

Answer / hemanta behera

Rectification of error it consists or ommited the amount in
any book.

Is This Answer Correct ?    2 Yes 1 No

what is rettification of error? ..

Answer / bashistha

for solving any mistake which occur at the time of passing entries in books of account.as example if we have purchase from party for Rs. 500 but by mistake its entered in books of accounts only Rs. 50 for solving this problem is called rectification of error.

Is This Answer Correct ?    1 Yes 0 No

what is rettification of error? ..

Answer / anil ahuja

retification of error is correcting the accouting entries
and ledger posting by the way of transfering the entry in
correct head and account

Is This Answer Correct ?    2 Yes 2 No

what is rettification of error? ..

Answer / arun kumar

rectifying the error occured in the account while preparing
the accounts is called rettification of errors

Is This Answer Correct ?    3 Yes 4 No

what is rettification of error? ..

Answer / srikantpatnaik

Rectification of error : It means the original entry is
wrongly accounted and based on the facts of the transactions
you decide to correct it, so you pass another entry so that
you rectify the error made in the original entry.

ex- you have paid rent and booked the following entry

rent outstanding a/c ..Dr Rs.10,000
To cash a/c Rs.10,000

correction entry.
Rent Account Dr....Rs.10,000
To Rent Outstanding Rs.10,000

the result would be your rent outstanding a/c would become
zero in the ledger(which is basically wrongly used) and
correct account Rent (expense) would appear in the Trial
Balance.

The correction entry to set right the earlier mistake is
called rectification of errors.

Is This Answer Correct ?    1 Yes 2 No

what is rettification of error? ..

Answer / suman saha

rettification error is a which i'm some accounting that
accounting observation right or wrong

Is This Answer Correct ?    7 Yes 11 No

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