Question
What is compensatory errors? How to rectify these errors? Explain with Illustration.
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Answer
| Date | Particular | L.F | Debit | Credit |
| Dhaval’s A/C Dr To Ishita A/C (Being rectification entry for Dhaval’s account debited less by $3,600$/- and Ishita account not credited with $3,600$/-.) |
$3,600$ | $3,600$ |
Meaning: In the books of accounts when more than one error exists but because of their nullifying effects on both debit and credit sides, the trial balance tallies, such errors are known as compensatory erro$Rs.$
In this type of error, the effect of error (or errors) on one side is removed by the effect of error (or errors) on another side. Means, the error on the amount on debit side, with the same amount if an error is there on the credit side, then the effect of error in totalling will be removed and trial balance will get tally.
How to rectify these errros?
e.g., Goods of $Rs.4,000$ sold to Dhaval which is debited to his account as $Rs. 400$, while received $Rs.3,600$ from Ishita, which is not posted to her account. Here Dhaval’s account is debited less by $Rs.3,600$ which is compensated with the error of $Rs. 3,600$ received from Ishita and not credited to her account, and therefore the trial balance will get tally. And so rectification entry is passed as follow:
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(2) Total of sales book is overcast by $₹ 600 .$
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