Rectification of error Chapter
# 6
How many kinds of errors?
There are two kinds of errors
- Book keeping error ( in books of original documents that are journal and ledger).
- Trial balance error (errors which are made in
preparation of trial balance
How many kinds of book keeping error?
- Error of omission: Where Transaction is completely omitted from the accounting records.
- Error of commission: An error of commission accrues when a transaction is partly or wholly incorrectly in the books of accounts
o
Wrong amount posting to ledger
o
Wrong side posting to ledger
o
Making wrong entry in book of original entry
- Error of principle: Mistakes arises out of ignorance of fundamental principles of accountancy e.g (wrong allocation of depreciation, inadequate provision of dad debts, and wrong allocation of revenue and capital and revenue expenditure)
- Compensating error: Compensating
error which are cancelled by an other error of same amount in opposite
direction
What is trial balance error?
Errors which are made in preparation
of the trail balance are called trial balance. Like
- Omission of balance form the trial balance
- Wrong transfer of balance (amount)
- Wrong side transfer of amount
- Wrong additions of trial balance
What is suspense account?
Suspense account is an account in which we entered
transaction which cannot be placed to their proper account for want sufficient
information.
What is error of
posting?
These errors are committed when a journal entry is posited
in to ledger.
What is error of
casting?
It is error of posting where as the error occur due to short
casting or excess casting of an accounts
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