Account 3 Marks Question

The total of Purchases Book is posted in the ledger as ₹ 10,000 in place of ₹ 1,00,000 and at the same time total of Sales Book is posted as ₹ 1,00,000 instead of ₹ 1,90,000.
These two errors neutralise the effect of each other.

No trial balance is not a conclusive proof of accuracy it can only be used to know the arithmetical accuracy their are various errors like error of principle, compensating error, error of complete omission which can not be detected through trial balance.

Errors of Commission are those errors which arise due to wrong recording, wrong posting, wrong carrying forward, wrong casting, wrong balancing, etc.

Balance of Suspense Account shows the net effect of errors which are still to be located and rectified. It will be shown on assets side (in case of debit balance) or on the liabilities side (in case of credit balance) of the Balance Sheet.

He should open Suspense Account and transfer the difference in the Trial Balance on the debit side of the Suspense Account (if the credit side of the Trial Balance exceeds the debit side) or on the credit side of the Suspense Account (if the debit side of the Trial Balance exceeds the credit side).

Rectification of Errors: Errors, whether affecting the Trial Balance or not, must be detected and corrected. The procedure followed to rectify the errors committed and to set right accounting records is called Rectification of Errors.The objectives of rectifying errors are:

1. Preparing correct accounting records.
2. Ascertaining correct net profit or loss for the accounting period by preparing Profit and Loss Account with the correct figures.
3. Exhibiting a true and fair view of financial position of the concern at a particular date by preparing Balance Sheet with the correct accounting data.

Examples of Two-Sided Error:

1. Machinery purchased recorded in the Purchases Book.
2. Old furniture sold recorded as sales of goods.
3. A cash of sale of ₹ 1,700 to meena was posted to the credit of meena.

Examples of One-Sided Error:

1. Depreciation on computers not posted to Depreciation A/c.
2. Purchase of stationery of ₹ 500 posted twice to Stationery A/c.