Accounting Errors

The term ‘Accounting Errors’ refers to the mistakes committed by an accountant while recording,
casting, carrying-forward, posting and summarizing the financial transactions.

Types of Errors
1. Clerical Errors
The errors which are committed by accounting clerks or book-keepers are called clerical errors.
These errors, i.e. in a journal are committed in the process of recording the financial transactions.
Clerical errors are also called technical errors. Such errors may be further classified as:
a. Errors of Omission: When a transaction is omitted to be recorded in a subsidiary book or to be
posted to the ledger, then such error is known as an error of omission.
An error of omission may be (a) an error of complete omission or (b) an error of partial
omission.
i. Complete omission: If a transaction is completely omitted to be recorded in a book of
original entry, then it is called an error of complete omission. For example, if a credit
purchase of goods is omitted to be entered in the purchase book, it is an error of
complete omission.
Similarly, if both the aspects of a transaction are omitted to be posted to the ledger
accounts, such error is also called an error of complete omission. For example, if goods
purchased on credit from Y, is entered in the purchase book but is omitted to be posted
to both purchase account and Y’s account, it is an example of complete omission.
Complete omission does not affect the agreement of trial balance.
ii. Partial omission: If one of the aspects of a transaction is already recorded in a subsidiary
book or journal but is omitted to be posted to a ledger account, then such error is an
error of partial omission. For example, if cash sales, recorded in the cash book is omitted
to be posted to sales account, then it is called an error of partial omission. Partial
omission affects the agreement of trial balance.
b. Errors of Commission: Errors committed in the process of recording or posting, totaling, carrying
forward and balancing either subsidiary books or ledger accounts, are called errors of
commission.
The following are the examples of errors of commission:
 Recording a wrong amount in a subsidiary book of journal. (Will not affect the agreement of
trial balance).
 Recording of a transaction in two or more subsidiary books. (Will not affect the agreement
of trial balance).
 Recording of a transaction in a wrong subsidiary book. (Will not affect the agreement of trial
balance).
c. Compensating Errors: When one error is counter balanced by another error, then such error is
known as compensating error. For example, if salaries account is under casted by Rs. 100 and
wages account is over casted by Rs. 100, the error in salaries account is set off by the error in
wages account. So, these two errors are known as compensating errors. Compensating errors
will not affect the trial balance.
 d. Errors of duplication: These are those errors, which arise due to the double recording of a
transaction in the books of original entry i.e. journal or subsidiary book. Similarly, when a
transaction is posted twice into the ledger accounts, then it is also called an error of duplication.
For example, if goods purchased from X are recorded two times in purchases book, then such
error is called error of duplication. Errors of duplication will not affect the trial balance.
2. Errors of Principle
When a transaction is recorded in a book of original entry or posted in a ledger account by violating
the basic principles of accounting, then such error is known as error of principle. In other words, if a
transaction is recorded in the book of accounts against the fundamental principles of double entry
book-keeping, the error is known as an error of principle. For example, if an income is treated as a
liability or vise-versa or if an expense is treated as an asset of vice-versa, then these errors are errors
of principle. These errors will not affect the agreement of the trial balance.

Errors which are disclosed by trail balance

Errors disclosed by disagreement of trial balance:

 Omission of Posting
 Omission of an account while preparing a Trial Balance
 Omission of casting
 Omission of carry forward
 Wrong Posting
 Bringing the balance of an account to the wrong side of the Trial Balance
 Wrong Totaling
 Wrong carry forward
 Wrong balancing
 Double posting to one account

Errors which are not disclosed by trail balance

Errors not disclosed by disagreement of Trial Balance

Errors of Principle

 Errors of complete Omission, i.e., omission of entry altogether form subsidiary books
 Writing wrong amount in subsidiary books

Compensating Errors

 Entering a transaction in two subsidiary books

 Posting an amount to the correct side but with wrong amount

Rectification of errors

When errors are discovered in the books they are corrected by means of entries in the accounts
concerned. The correction of errors is journalized in systematic manner by passing a special entry in the
journal proper which is termed as rectification of errors. Before preparing the rectification entry on
should identify the errors that have been committed in the books of accounts.
Two Sided errors: A two sided error is an error, which affects both debit aspect and credit aspect of a
transaction. It affects two or more accounts.

Example 1: Salary paid to Ram Rs. 10,000 wrongly debited to his account.

Step 1:

Correct Wrong

Salary a/c…………….Dr. 10,000 ÷ Ram a/c……………Dr. 10,000

To Cash a/c 10,000 To Cash a/c 10,000

Step 2:

Salary a/c…………...Dr. 10,000 x Cash a/c……………Dr. 10,000

To Cash a/c 10,000 To Ram a/c 10,000

Step 3: Rectification entry

Salary a/c…………….Dr. 10,000
To Ram a/c 10,000
(Being salary paid to Ram wrongly debited to his account, now rectified)

Example 2: Rent paid to Landlord Rs. 5,000 was wrongly debited to Landlord a/c.

Correct Wrong

Rent a/c…………….Dr. 5,000 ÷ Landlord a/c……………Dr. 5,000

To Cash a/c 5,000 To Cash a/c 5,000

Rectification entry

Rent a/c…………….Dr. 5,000

To Landlord a/c 5,000

Example 3: Wages paid to Kamal Rs. 2,000 was wrongly debited to his personal account.

Correct Wrong

Wages a/c…………….Dr. 2,000 ÷ Kamal a/c……………Dr. 2,000

To Cash a/c 2,000 To Cash a/c 2,000

Rectification entry

Wages a/c…………….Dr. 2,000

To Kamal a/c 2,000
Example 4: Purchased furniture Rs. 20,000 was charged to office expenses account.

Correct Wrong

Furniture a/c…………….Dr. 20,000 ÷ Office expenses a/c……………Dr. 20,000

To Cash a/c 20,000 To Cash a/c 20,000

Rectification entry

Furniture a/c…………….Dr. 20,000

To Office expenses 20,000

Example 5: Wages paid Rs. 2,000 for installation of machinery was debit to wages a/c.

Correct Wrong

Machinery a/c…………….Dr. 2,000 ÷ Wages a/c……………Dr. 2,000

To Cash a/c 2,000 To Cash a/c 2,000

Rectification entry

Machinery a/c……………Dr. 2,000

To Wages a/c 2,000

Example 6: Goods Sold to Ram for RS. 10,000 was wrongly been debit to Rama a/c

Correct Wrong

Ram a/c…………….Dr. 10,000 ÷ Rama a/c……………Dr. 10,000

To Sales a/c 10,000 To Sales a/c 10,000

Rectification:

Ram a/c…………….Dr. 10,000

To Rama a/c 10,000

Example 7: Sale of old machine Rs. 15,000 has been credited to Sales account.

Correct Wrong

Cash a/c…………….Dr. 15,000 ÷ Cash a/c……………Dr. 15,000

To Machine a/c 15,000 To Sales a/c 15,000

Rectification

Sales a/c……………Dr. 15,000

To Machine 15,000
Example 8: Goods purchased from Ram Rs. 10,000 was passed through sales book.

Correct Wrong

Purchase a/c…………….Dr. 10,000 ÷ Ram a/c……………Dr. 10,000

To Ram a/c 10,000 To Sales a/c 10,000

Rectification:

Purchase a/c……………..Dr. 10,000

Sales a/c…………………….Dr. 10,000
To Ram a/c (10,000 + 10,000) 20,000

Example 9: Goods sold to Kamal Rs .20,000 recorded through purchase book.

Correct Wrong

Kamal a/c…………….Dr. 20,000 ÷ Purchase a/c……………Dr. 20,000

To Sales a/c 20,000 To Kamal a/c 20,000

Rectification:

Kamal a/c (20,000 + 20,000)……………Dr. 40,000

To Sales a/c 20,000
To Purchase a/c 20,000
 1. The following errors committed by the accountant of RMC before preparing trial balance:
a. Purchased furniture of Rs. 5,000 was charged to office expenses account.
b. A sales of Rs. 10,000 to Rajiv was passed through purchase book.
c. Rent paid to Mr. A Rs. 3,000 wrongly debited to his personal account.
Correct Wrong
a. Furniture a/c….….Dr. 5,000 ÷ Office expenses a/c………Dr. 5,000
To Cash a/c 5,000 To Cash a/c 5,000
b. Rajib a/c…………….Dr. 10,000 ÷ Purchase a/c……..……...…Dr. 10,000
To Sales a/c 10,000 To Rajib a/c 10,000
c. Rent a/c…………….Dr. 3,000 ÷ Mr. A a/c…………..…………Dr. 3,000
To Cash a/c 3,000 To Cash a/c 3,000

Rectification Entries

Date Particulars LF Debit Rs. Credit Rs.

a. Furniture a/c………………………………………………………………………………..…………….Dr. 5,000
To Office expenses /ac 5,000
(Being furniture purchased, now rectified)
b. Rajib's a/c………………………………………………………………...……………………………….Dr. 20,000
To Purchase a/c 10,000
To Sales a/c 10,000
(Being sold to Rajiv wrongly posted in purchase book, now rectified)
c. Rent a/c…………………………………………………………………………………………………….Dr. 3,000
To Mr. A's a/c 3,000
(Being rent paid to Mr. A wrongly posted personal account, now rectified)

2. Rectify following errors before preparing of trial balance. (New Model Question)
a) Cash sales to Sharma Rs. 45,000 debited to his account
b) Sales of machinery @ Rs. 19,000 were wrongly credited in sales account.
c) Purchase goods from Pema Rs. 20,000 recorded in sales book.
Correct Wrong
a. Cash a/c………..….Dr. 45,000 ÷ Sharma a/c………..Dr. 45,000
To Sales a/c 45,000 To sales a/c 45,000
b. Cash a/c………..….Dr. 19,000 ÷ Cash a/c………...…Dr. 19,000
To Machinery a/c 19,000 To Sales a/c 19,000
c. Purchase a/c….….Dr. 20,000 ÷ Pema a/c……….…Dr. 20,000
To Pema a/c 20,000 To Sales a/c 20,000
 Rectification entries

Date Particulars LF Dr. Cr.

a. Cash a/c……………………………………..……………………………….Dr. 45,000
To Sharma a/c 45,000
(Being cash sales to Sharma wrongly debited to
his account, now rectified)
b. Sales a/c……………………………………………………………..………Dr. 19,000
To Machinery 19,000
(Being sale of machinery wrongly credit
in sales account, now rectified)
c. Purchase a/c…………………………………………………….………..Dr. 20,000
Sales a/c………………………………………………………………..…..Dr. 20,000
To Pema a/c (20,000 + 20,000) 40,000
(Being purchased goods from Pema wrongly recorded
in sales book, now rectified)

3. The following errors were located before preparing trial balance.

a. Salary of Rs. 10,000 paid to Mr. Khadka has been debited to his personal account.
b. House rent paid Rs. 15,000 was wrongly debited to commission paid account.
c. Wages paid to Hari Rs. 3,000 was debited to Hari’s account.
4. Following errors were located after preparing trial balance.
a. Sale of old machine Rs. 60,000 has been wrongly credited to sales account.
b. Purchased goods from Suman for Rs. 10,000 past wrongly through the sales book.
c. Wages paid for the installation of machine was wrongly debited to wages account Rs. 10,000.
5. Following errors were located before preparing trial balance.
a. Furniture purchased for Rs. 20,000 was recorded in purchase book.
b. Wages paid to Ram Rs. 15,000 was wrongly debited to Ram account.
c. A credit sales of Rs. 10,000 to Mr. X was wrongly recorded in purchase book.
6. Following errors were located after preparing trial balance.
a. A credit purchase of Rs. 1,000 from Shyam has been recorded as sales to him.
b. Carriage paid for machinery purchase was posted to carriage expenses account Rs. 5,000.
c. Paid to Hari Rs. 3,000 was completely omitted to be posted in his account.
d. A machine sold for Rs. 5,000 has been posted into sales book.
 One Sided Error
These errors are also known as single sided errors. These errors affect only one account or a book. An
error, which affects only one side of an account, is known as one-sided error. It is an error which affects
only one aspect of a transaction.

Rules:

a. Purchase, expense, assets, sales return (Debit sided)

If undercast: purchase, expense, assets, sales return – Debited
If overcast: purchase, expense, assets, sales return – Credited
b. Sales, income, liabilities, purchase return (Credit sided)
If undercast: Sales, income liabilities, purchase return – Credited
If over cast: Sales, income liabilities, purchase return – Debited
7. One Sided Error before Preparing Trial Balance
a. Purchase book was undercast by Rs. 100.
b. Purchase book was overcast by Rs. 200.
c. Sales book was undercast by Rs. 300.
d. Sales book was overcast by Rs. 400.
e. Purchase return book was undercast by Rs. 500.
f. Purchase return was overcast by Rs. 600
g. Sales return book was undercast by Rs. 700.
h. Sales return book was overcast by Rs. 800

Solution,
a. Dr. Purchase Account Cr.

J
Date Particulars JF Amount Date Particulars F Amount
To Rectification of
undercast
100

b. Dr. Purchase Account Cr.

J
Date Particulars JF Amount Date Particulars F Amount

By rectification of overcast 200

c. Dr. Sales Account Cr.

J
Date Particulars JF Amount Date Particulars F Amount
By rectification of 300
 undercast

d. Dr. Sales Account Cr.

J
Date Particulars JF Amount Date Particulars F Amount
To Rectification of
overcast
400

e. Dr. Purchase return Account Cr.

J
Date Particulars JF Amount Date Particulars F Amount
To Rectification of
undercast 500

f. Dr. Purchase return Account Cr.

J
Date Particulars JF Amount Date Particulars F Amount
To Rectification of
overcast
600

g. Dr. Sales return Account Cr.

J
Date Particulars JF Amount Date Particulars F Amount
To Rectification of
undercast
700

h. Dr. Sales return Account Cr.

J
Date Particulars JF Amount Date Particulars F Amount

To Rectification of overcast 800

8. One sided error before preparing trial balance.

a. Purchase book was undercast by Rs. 1,000.
b. Sales book was overcast by Rs. 3,000.
c. Sales return book was undercast by Rs. 500.
 d. Purchase return book was overcast by Rs. 900.
9. ONE SIDED ERROR AFTER PREPARING TRIAL BALANCE
a. Purchase book was undercast by Rs. 100.
b. Purchase book was overcast by Rs. 200.
c. Sales book was undercast by Rs. 300.
d. Sales book was overcast by Rs. 400.
e. Purchase return book was undercast by Rs. 500.
f. Purchase return was overcast by Rs. 600
g. Sales return book was undercast by Rs. 700.
h. Sales return book was overcast by Rs. 800
Solution,

a. Dr. Purchase Account Cr.

L
Date Particulars F Debit Rs. Credit Rs.
Purchase a/c………………………………………………………………Dr. 100
To Suspense a/c 100
(Being rectification of undercast of purchase book)
b. Dr. Purchase Account Cr.

L
Date Particulars F Debit Rs. Credit Rs.
Suspense a/c……………………………………………………………..Dr. 200
To Purchase a/c 200
(Being rectification of overcast of purchase book)
c. Dr. Sales Account Cr.

L
Date Particulars F Debit Rs. Credit Rs.
Suspense a/c……………………………………………………………..Dr. 300
To Sales a/c 300
(Being rectification of undercast of sales book)
d. Dr. Sales Account Cr.

L
Date Particulars F Debit Rs. Credit Rs.
Sales a/c……………………………………………………………………Dr. 400
To Suspense a/c 400
(Being rectification of overcast of sales book)
e. Dr. Purchase return Account Cr.

L
Date Particulars F Debit Rs. Credit Rs.
Suspense a/c……………………………………………………………..Dr. 500
To Purchase return a/c 500
 (Being rectification of undercast of purchase return book)
f. Dr. Purchase return Account Cr.

L
Date Particulars F Debit Rs. Credit Rs.
Purchase return a/c…………………………………………………..Dr. 600
To Suspense a/c 600
(Being rectification of overcast of purchase return book)
g. Dr. Sales return Account Cr.

L
Date Particulars F Debit Rs. Credit Rs.
Sales return a/c………………………………………………………….Dr. 700
To Suspense a/c 700
(Being rectification of undercast of sales return book)

h. Dr. Sales return Account Cr.

L
Date Particulars F Debit Rs. Credit Rs.
Suspense a/c……………………………………………………………..Dr. 800
To Sales return a/c 800
(Being rectification of overcast of sales return book)

10. Errors detected before preparing trial balance.

a. Cash paid to Kumar Rs. 1,000 has been debited to his account by Rs. 100.
b. Goods sold to Kamal Rs. 900 has been debited to Kamal account by Rs. 9,000.
c. Purchased goods from Ram Rs. 20,000 was debited Rs. 2,000 in purchase account.
d. A credit Sales to Binod Rs. 35, debited as Rs. 53 in his account.
e. A credit Sales to Sheela Rs. 35 credited as Rs. 53 in sales account.
f. Goods sold to Ram Rs. 5,000 on credit was debited as Rs. 500 in his account.
g. Goods sold to Ram Rs. 5,800 but debited as Rs. 8,500 in his account.

Solution,

a. Dr. Kumar Account Cr.

J
Date Particulars JF Amount Date Particulars F Amount
To Rectification of
under (short) debit
900

b. Dr. Kamal Account Cr.

Date Particulars JF Amount Date Particulars J Amount

 F
By rectification of over
debit 8,100

c. Dr. Purchase Account Cr.

J
Date Particulars JF Amount Date Particulars F Amount
To rectification of
under debit
18,000

d. Dr. Binod Account Cr.

J
Date Particulars JF Amount Date Particulars F Amount
By rectification of over
debit 18

e. Dr. Sales Account Cr.

J
Date Particulars JF Amount Date Particulars F Amount
To rectification of
over credit
18

f. Dr. Ram Account Cr.

J
Date Particulars JF Amount Date Particulars F Amount
To Rectification of
under debit
4,500

g. Dr. Ram Account Cr.

J
Date Particulars JF Amount Date Particulars F Amount
By Rectification of over
debit 2,700
11. Errors detected after preparing trial balance.
a. Cash paid to Kumar Rs. 1,000 has been debited to his account by Rs. 100.
b. Goods sold to Kamal Rs. 900 has been debited to Kamal account by Rs. 9,000.
c. Purchased goods from Ram Rs. 20,000 was debited Rs. 2,000 in purchase account.
d. A credit Sales to Binod Rs. 35, debited as Rs. 53 in his account.
e. A credit Sales to Sheela Rs. 35 credited as Rs. 53 in sales account.
f. Goods sold to Ram Rs. 5,000 on credit was debited as Rs. 500 in his account.
g. Goods sold to Ram Rs. 5,800 but debited as Rs. 8,500 in his account.

Solution,

Date Particulars LF Dr. Cr.

a. Kumar a/c………………………………………………………..Dr. 900

To Suspense a/c 900
b. Suspense a/c…………………………………………………..Dr. 8,100
To Kamal a/c 8,100
c. Purchase a/c……………………………………………………Dr. 18,000
To Suspense a/c 18,000
d. Suspense a/c…………………………………………………..Dr. 18
To Binod a/c 18
e. Sales a/c…………………………………………………………..Dr. 18
To Suspense a/c 18
f. Ram a/c…………………………………………………………….Dr. 4,500
To Suspense a/c 4,500
g. Suspense a/c…………………………………………………..Dr. 2,700
To Ram a/c 2,700
12. The following errors were located before preparing trial balance.
a. Salary paid to Ram was debited to wages account Rs.600
b. Wage paid for carriage for furniture was wrongly debited to wage account.300
c. Amount paid to Ram Rs. 10,000 was wrongly posted Rs. 100 in Ram account.
d. Sales book was undercast by Rs. 500.
13. The following errors were located after preparing trial balance.
a. Purchase return book was overcast by Rs. 300.
b. Sales book was overcast by Rs. 500.
c. Goods distributed as free sample was not recorded at all.400
d. Goods purchase of Rs. 1,000 on credit from Ram was recorded into sales book.
14. Following errors rectified after preparing trial balance.
a. Goods valued Rs. 30,000 sold to Anjana omitted to record in her account.
b. Interest received Rs. 500 was wrongly credited in commission receive account.
c. Payment made to Ram Rs. 10,000 was not posted in his account.
15. The following errors were located before preparing trial balance.
a. An amount of Rs. 550 received from Aryan was posted to his account Rs. 5,500.
b. Rs. 15,000 paid for house rent omitted to post in cash account.
c. A cash sales of Rs. 12,350 duly entered in cash book but posted to sales account as Rs. 2,350.