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CHAPTER Rectification of Errors
CHAPTER

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MEANING OF KEY TERMS USED IN THE CHAPTER

1. Trial Balance It is a statement showing balances of various accounts in the ledger
and the Cash Book at a particular date.
2. One-sided Errors Errors that affect the debit or credit side of a single account.
3. Two-sided Errors Errors that affect two or more accounts.
4. Error of Recording It means recording the entry in Subsidiary Books wrongly.
5. Error of Posting It means an entry being not posted at all or partially or being posted
by wrong amount or to the wrong account.
6. Error of Balancing It means calculating the balance in account wrongly.
7. Error of Casting It means an error in totalling.
8. Error in Carrying It means an error in carrying forward the total of one
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9. Error of Principle It means recording a transaction in the books of account which is not
in accordance with the accounting principles.
10. Error of Omission It means an error committed whereby a transaction is omitted to be
recorded completely or partially.
11. Errors of Commission Errors caused by wrong recording of transactions.
12. Compensating Errors Errors that compensate each other.
13. Suspense Account It is an account opened to temporarily tally the Trial Balance.
14. Rectifying Entries Entries made in books of account for correction of errors.

CHAPTER SUMMARY
• Trial Balance is prepared to check the arithmetical accuracy of the books of account. The two sides of
the Trial Balance must be equal, i.e., the total of the debit side must be equal to total of credit side.
Disagreement of a Trial Balance means that there are errors in books of account. Some of the
errors affect the agreement of the Trial Balance and are disclosed by the Trial Balance.
• Errors Reflected by Trial Balance
(i) Posting of one aspect of the Journal entry in the Ledger.
(ii) Posting a Journal entry on the wrong side of an account.
(iii) Wrong total of Subsidiary Books.
(iv) Posting correct amount in one account and wrong amount in other account.
(v) Wrong totalling or balancing of a Ledger account.
(vi) Omission to enter an account balance in the Trial Balance.
(vii) Balance of an account written in the wrong column in the Trial Balance.
• Errors Not Reflected by Trial Balance (or Limitations of Trial Balance)
(i) Errors of Principle.
(ii) Compensating Errors.
(iii) Error of Complete Omission.