Rectification Of Accounting Errors

Accountancy firm prepare trial balance to evaluate the correctness of documents. If total of charge balances does not consent with the whole of credit balances, it is just a clear-cut signal that certain errors have been committed while documenting the transactions in the books of original access or subsidiary books. This is our utmost work to locate these mistakes and rectify them, only then we should carry on for preparing final data files. We also know that all types of mistakes are not revealed by trial balance as some of the errors do not effect the total of trial balance. Therefore these may not be located with the aid of trial balance. An curator should invest his energy to locate both types of errors and fix them before preparing trading, profit and loss consideration and balance sheet. Since if these are well prepared before rectification these will not give us the best result and profit and loss disclosed by them, shall not be the actual profit or reduction. Parramatta

All errors of accounting procedure can be labeled the following:

1. Problems of Basic principle

When a transaction is recorded against the fundamental principles of accounting, it is an error of principle. To get example, if earnings costs is treated as capital expenditure or the other way round. 

2. Paperwork Errors

These errors can again be sub-divided as follows:

(i) Errors of omission

When a deal is either wholly or partially not recorded in the books, it is an error of omission. It may be with regard to omission to enter a transaction in the books of original entry or with consideration to omission to post a transaction from the books of original access to the account worried in the ledger.

(ii) Errors of percentage

Once an entry is improperly recorded either wholly or partially-incorrect posting, calculation, sending your line or balancing. Some of the errors of commission payment effect the trial balance whereas others do not. Errors effecting the trial balance can be unveiled by preparing a trial balance.

(iii) Compensating problems

Sometimes a blunder is counter-balanced by another error in such a way that it is not disclosed by the trial balance. Many of these errors are called paying errors.

From the point of view of changement of the errors, place be divided into two groups:

(a) Errors impacting on one account only, and

(b) Errors affecting two or more accounts.

Problems affecting one accounts

Problems which affect can be:

(a) Casting errors;

(b) error of posting;

(c) carry forward;

(d) weighing; and

(e) omission from trial balance.

Such mistakes should, first of all, be located and fixed. They are rectified either by making use of journal entry or by giving an explanatory notice in the account worried.