TRIAL BALANCE & RECTIFICATION OF ERRORS

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WE WILL BE HAVING  ILLUSTRATIVE AND INTERACTIVE CLASS. 

YOU WILL BE ABLE TO UNDERSTAND THE TOPIC  BY WATCHING VARIOUS SHORT AND

 EXPLANATORY VIDEOS AND THE ILLUSTRATIVE IMAGES.

THIS WILL HELP YOU TO GET THE PICTORIAL VIEW OF THE TOPIC.



Preparation of Trial Balance

Its Objectives

      

The format of a trial balance is given below.
 

Trial Balance as on ……
List of Accounts	L.F.	Debit Balances Amount (Rs)	Credit Balances Amount (Rs)
1	2	3	4
Total

WATCH THE VIDEO ON  SPECIMEN OF THE TRIAL BALANCE

LINK : SPECIMEN OF THE TRIAL BALANCE

Methods of Preparing a Trial Balance

Steps to Prepare a Trial Balance

WATCH THE VIDEO BELOW FOR UNDERSTANDING THE  PREPARATION OF TRIAL BALANCE 

LINK :  PREPARATION OF TRIAL BALANCE

TYPES OF ERRORS

(a) Errors of Omission

1) Partial Omission
2) Complete Omission

(b) Errors of Commission
(c) Compensating Errors

,Alternate Classification of Errors

EXAMPLE: 

WHAT'S THE VIDEO BELOW FOR THE CONCEPT OF RECTIFICATION

LINK : CONCEPT OF RECTIFICATION

Errors not affecting Trial Balance

 WATCH THE VARIOUS SHORT AND DEMONSTRATING VIDEOS TO UNDERSTAND

THE VARIOUS TYPES OF ERRORS

LINK : ERROR OF OMISSION

LINK : ERROR OF COMMISSION

LINK : ERRORS IN POSTING

LINK : ERRORS OF PRINCIPLE

Compensating Errors

FEW EXAMPLES : 

WATCH THE VIDEO BELOW FOR THE CLARITY OF COMPENSATING ERRORS

LINK : COMPENSATING ERRORS

Errors affecting Trial Balance

WATCH THE VIDEOS BELOW ON SINGLE SIDED ERRORS AND ITS RECTIFICATION

LINK : SINGLE SIDED ERRORS

LINK : RECTIFICATION OF SINGLE SIDED ERRORS

(1) Partial Omission: Whenever a business transaction is correctly recorded in the books, but, at the time of its posting it is posted in only one of the Ledger Account. So, this error will be called Partial Omission. In simple words, under Partial Omission only one part of transaction (debit/credit) is posted and the other part is omitted (or ignored).

Example Credit sale to Raghuveer Singh of Rs 2,850 was not posted to Raghuveer Singh's Account. In this case, journal entry

 is correctly recorded in the books. However, at the time of its posting only one aspect of transaction has been posted, other aspect is totally omitted. Therefore, it is a case of Partial Omission. Look below to understand exactly what was happened:

Raghuveer Singh	Dr.	2,850
To Sales A/c			2,850
(Credit sale made)

Above entry was correctly recorded in the books. Now look carefully what happened at the time of its posting:

Here two accounts are involved in the transaction:
 

Sales Account
Dr.		Cr.
Particulars	Amount (Rs)	Particulars	Amount (Rs)
		Raghuveer Singh	2,850

You can see Raghuveer Singh Account has been correctly posted on the credit side of Sales Account. Now let’s see the position of Raghuveer Singh’s Ledger Account:


 

 

This shows Partial Omission, as only credit aspect of the transaction is considered without considering its debit aspect. Therefore, this will also not allow the Trial Balance to agree.


(2) Mistake in totaling or balancing an account: Sometimes errors are committed at the time of totaling a ledger account or a trial balance, such type of errors is called errors of totaling or casting. Like totaling errors, there can be balancing errors and carry forwarding errors as well, the balancing errors are the mistakes committed at the time of calculating closing balance figure of any Ledger Account.

Example Closing balance of Sales Account is wrongly calculated as Rs 45,600 while the actual balance was Rs 48,600, so this is an error of balancing. On the other hand, error of carry forwarding balances are the errors committed at the time of carry forwarding balance of one page to the other. For example, Sales Book total of a page of Rs 4,820 was carry forwarded to the next page as Rs 4,280. All these errors are single sided errors, so they affect agreement of Trial Balance.

(3) Posting on the wrong side of Ledger Account: Whenever a correctly recorded business transaction is posted on the wrong side of Ledger Account. Then such an error is called error of posting on the wrong side of Ledger Account.

Example Paid Salary of Rs 8,000, and it is posted on the credit side of the Salary Account. In this case, there is an error committed at the time of posting of the transaction and that also in one account; therefore, it is a single sided error. Look below to understand exactly what was happened:
 

Salary A/c	Dr.	8,000
To Cash A/c			8,000
(Salary paid)

This shows business transaction has been correctly recorded in the books. Now let’s see its Ledger Posting. Here two accounts are involved in this transaction:

Cash Account
Dr.		Cr.
Particulars	Amount (Rs)	Particulars	Amount (Rs)
		Salary A/c	8,000

This shows Salary A/c has been correctly posted on the credit side of the Cash Account. Now let’s see position of Salary Ledger Account:

This shows, instead of recording 'Cash Account' on the debit side of 'Salary Account', it has been recorded on its credit side. This is an error of posting on the wrong side of account.

(4) Posting of wrong amount in one account only: When a business transaction is posted with wrong amount in one Ledger Account and correctly in its corresponding Ledger Account. Then such an error is called error of posting wrong amount in one of the account. This is a single sided error as only a part of transaction is affected. Thus, it will lead to mismatch in the total of the trial balance.

Example Sold goods on credit to Vansh for Rs 3,500, is posted as Rs 5,300 in Ledger Account of Vansh. The transaction for the sale of goods has been correctly recorded in the books. While posting the transaction, Sales Account is credited correctly with Rs 3,500. On the other hand, in the Ledger Account of Vansh, Sales Account is debited with the amount of Rs 5,300 instead of Rs 3,500. This is an error of posting of wrong amount in one account only. It is a single sided error as only one account is affected. Look below to understand exactly what was happened:

 

Vansh	Dr.	3,500
To Sales A/c			3,500
(Credit sale made)

This shows business transaction has been correctly recorded in the books. Now let’s see its ledger posting. Here two accounts are involved in the transaction:

Sales Account
Dr.		Cr.
Particulars	Amount (Rs)	Particulars	Amount (Rs)
		Vansh	3,500

This shows Vansh's Account is correctly recorded on the credit side of Sales Account with Rs 3,500. Now let’s see position of Ledger Account of Vansh

This shows Sales A/c has been correctly posted on the debit side of Vansh's Account but error has been made in posting amount of Sales that is Rs 3,500 not 5,300.
This is an error of posting wrong amount in one account. This is a single sided error and will not allow Trial Balance to agree.

(5) An account is altogether omitted to be shown in the Trial Balance: As we learnt that closing balances of all Ledger Accounts are transferred to the Trial Balance. Sometimes it happens that one of the Ledger Account is altogether omitted to be recorded in the Trial Balance. So due to this error trial balance will not agree.

(6) Double posting to one account: There may be a situation when a correctly recorded business transaction is posted twice in one Ledger Account. Such an error is double posting to one account. Due to this error, one account balance is increased without affecting its corresponding Ledger Account. This is a single sided error, as only single account is affected and therefore, it will not allow Trial Balance to be tallied.