Rectification of Errors which do not Affect the Trial Balance

Rectification of Errors which do not Affect the Trial Balance

These errors are committed in two or more accounts. Because they affect at least two accounts, the trial balance remains in agreement despite the mistake. Such errors are also called two-sided errors.

The key point: since the trial balance already tallies, you cannot simply pass an entry through the suspense account. Instead, you must directly correct the accounts involved by recording a journal entry that gives the correct debit and credit to the concerned accounts.

What kinds of errors fall here?

• Complete omission to record an entry in the books of original entry (e.g., a sale never entered in the sales book)
• Wrong recording of transactions in the book of accounts (e.g., recording ₹1,000 instead of ₹10,000)
• Complete omission of posting to the wrong account on the correct side (e.g., posting a sale to Ram instead of Mohan)
• Errors of principle (e.g., treating a capital expenditure as revenue)

The rectification process — the logic

You need to do two things:

1. Cancel the effect of the wrong debit or credit by reversing it
2. Restore the effect of the correct debit or credit

To figure out the entry, analyse the error in terms of its effect on each account. An account may have:

• A short debit or short credit (less than what should be there)
• An excess debit or excess credit (more than what should be there)

The rule for the rectification entry is straightforward:

• Debit the account that has a short debit or an excess credit
• Credit the account that has an excess debit or a short credit

Worked examples from the textbook

Example (a): Complete omission — credit sales to Mohan ₹10,000 not recorded at all

The error: neither Mohan's account was debited nor Sales account was credited.

The rectification is simply the usual entry for credit sales:

Example (b): Wrong amount — credit sales to Mohan ₹10,000 recorded as ₹1,000

Wrong entry made:

Correct effect should have been:

Mohan's account has a short debit of ₹9,000; Sales account has a short credit of ₹9,000. So we give the additional debit and credit:

Example (c): Wrong amount — credit sales to Mohan ₹10,000 recorded as ₹12,000

Wrong entry made:

Correct effect should have been:

Mohan's account has an excess debit of ₹2,000; Sales account has an excess credit of ₹2,000. To cancel the excess, we do the opposite:

Example (d): Wrong posting — credit sales to Mohan ₹10,000 posted to Ram's account

Wrong posting effect:

Correct effect should have been:

Sales account is correct. Ram's account has an excess debit of ₹10,000; Mohan's account has a short debit of ₹10,000. So we transfer the debit from Ram to Mohan:

Example (e): Wrong account — rent paid ₹2,000 wrongly shown as payment to landlord

Wrong entry:

Correct effect should have been: …