Rectification of Errors
Found an error? Don't panic. Let's fix it systematically!
Two Scenarios
1. Errors Discovered BEFORE Trial Balance
- Rectify directly in the books
- Simple journal entry
2. Errors Discovered AFTER Trial Balance
- Use Suspense Account (if Trial Balance didn't tally)
- Rectification entry needed
Rectification BEFORE Trial Balance
Method: Pass a simple rectification entry
Example 1: Wrong Account
Error: Rent ₹5,000 wrongly debited to Salary A/c
Rectification:
| Particulars | Debit | Credit |
|---|---|---|
| Rent A/c Dr. | 5,000 | |
| To Salary A/c | 5,000 | |
| (Being error rectified) |
Example 2: Wrong Amount
Error: Sales ₹10,000 recorded as ₹1,000
Rectification:
| Particulars | Debit | Credit |
|---|---|---|
| Cash/Debtor A/c Dr. | 9,000 | |
| To Sales A/c | 9,000 | |
| (Being short recording rectified) |
Rectification AFTER Trial Balance
Method: Use Suspense Account
Example 3: One-Sided Entry
Error: Purchased goods ₹8,000 from Mohan. Only Purchases A/c debited, forgot to credit Mohan A/c.
Effect: Credit side short → Suspense A/c created with ₹8,000 Dr.
Rectification:
| Particulars | Debit | Credit |
|---|---|---|
| Suspense A/c Dr. | 8,000 | |
| To Mohan A/c | 8,000 |
Example 4: Wrong Posting
Error: Sold goods ₹6,000 to Ram, but posted ₹600 to his account
Effect: Credit side short by ₹5,400 → Suspense A/c ₹5,400 Dr.
Rectification:
| Particulars | Debit | Credit |
|---|---|---|
| Suspense A/c Dr. | 5,400 | |
| To Ram A/c | 5,400 |
Example 5: Error of Principle
Error: Furniture ₹20,000 debited to Purchases A/c
Rectification (No Suspense needed - Trial Balance tallied):
| Particulars | Debit | Credit |
|---|---|---|
| Furniture A/c Dr. | 20,000 | |
| To Purchases A/c | 20,000 |
Example 6: Compensating Errors
Error 1: Sales overstated by ₹2,000
Error 2: Purchases overstated by ₹2,000
Rectification:
| Particulars | Debit | Credit |
|---|---|---|
| Sales A/c Dr. | 2,000 | |
| Purchases A/c Dr. | 2,000 | |
| To Suspense A/c (if created) | 4,000 |
(If no Suspense, adjust individually)
Step-by-Step Approach
Step 1: Identify the error type
Step 2: Determine what SHOULD have been done
Step 3: Determine what WAS actually done
Step 4: Pass entry to correct the difference
Step 5: If Suspense exists, ensure it gets adjusted
Quiz
Test Your Knowledge
Question 1 of 4
1. Errors discovered before Trial Balance are rectified by:
💡 Final Wisdom: "Rectification is like 'Undo' in MS Word. Find the mistake, reverse it, do it correctly. Simple!"