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Rectification of errors
Correction of errors in the books of accounts is not done by erasing, rewriting or striking the figures which are incorrect. Correcting the errors that has occurred is called Rectification.
Appropriate entry is passed or suitable explanatory note is written in the respective account or accounts to neutralise the effect of errors.
From the point of rectification, errors may be classified as follows:
i. Single sided errors are errors which affect one side of an account.
ii. Double sided errors are errors which affect both the accounts in a transaction.
Basic Principles for Rectification of Errors
All errors, whatever may be their kind or nature, result in one of the following four positions in one or more accounts.
i. Excess debit in one or more accounts: This must be rectified by ‘crediting’ the excess amount to the respective account or accounts.
ii. Short debit in one or more accounts: This must be rectified by a ‘further debit’ to the respective account or accounts involved.
iii. Excess credit in one or more accounts: This can be rectified by ‘debiting’ the respective account with the excess amount involved.
iv. Short credit in one or more accounts: This can be rectified by a ‘further credit’ to the respective account or accounts involved.
The following three steps may be adopted while attempting to rectify an error:
i. Ascertain what has actually been done, i.e. what is the error?.
ii. Make sure what ought to have been done, i.e., the correct record.
iii. Decide what is to be done in view of what has been done and what ought to have been done. i.e., rectification.
Stages of Rectification
The stage in which rectification is done depends on identification or locating the error. Rectification of errors may be explained in two stages.
i. Rectification before the preparation of trial balance : In this stage errors are located before transferring the difference in the trial balance to Suspense Account.
ii. Rectification after the preparation of trial balance: In this stage the difference in the trial balance would have been transferred to Suspense Account. So wherever applicable suspense account is used while passing rectification entries.
Stage at which the errors are rectified |
Manner in which the errors are rectified |
i. When the errors are rectified before transferring the difference in the trial balance to the suspense account |
By debiting or crediting the respective account with the required amount by giving an explanatory note in the particulars column. |
ii. When the errors are rectified after transferring the difference in the trial balance to the suspense account |
By writing a journal entry with the respective account or accounts affected by the errors and suspense account. |
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