Trial balance and Rectification of Errors class 11 NCERT Book chapter 6
Trial balance and Rectification of Errors class 11 Intoduction
In financial accounting, the trial balance serves as a fundamental tool for ensuring the accuracy of a company’s financial records. This statement compiles all ledger accounts, showcasing their respective debit and credit balances. The primary objective of the trial balance is to verify that the total debits equal total credits, thereby confirming the adherence to the foundational accounting equation of Assets = Liabilities + Equity.
Trial balance and Rectification of Errors class 11 Important notes
- Purpose: The primary purpose of the trial balance is to test the arithmetic accuracy of accounting records and ensure that the fundamental accounting equation is in balance.
- Content: It includes a list of all ledger accounts with their respective debit and credit balances.
- Preparation: The trial balance is typically prepared at the end of an accounting period before the financial statements are generated.
- Balancing Equation: For the trial balance to be considered correct, the total of debit balances must equal the total of credit balances.
- Identification of Errors: While it identifies arithmetic errors, it does not guarantee the absence of other types of errors like errors of principle.
Rectification of Errors
- Objective: Rectification of errors aims to identify and correct mistakes made during the accounting process.
- Types of Errors:
- Errors of Omission: Occur when a transaction is entirely or partially omitted from the books.
- Errors of Commission: Arise when incorrect entries are made.
- Errors of Principle: Involve violations of accounting principles.
- Compensating Errors: Errors that offset each other.
- Methods of Rectification:
- Journal Entry Correction: Directly correcting errors in the journal by making appropriate entries.
- Suspense Account: Using a suspense account to temporarily hold the impact of unidentified errors until they are resolved.
- Counterbalancing Correction: Introducing new entries to offset the effects of the original errors.
- Timing: Rectification of errors can be done at any time, but it’s crucial to correct them before preparing financial statements.
- Impact on Financial Statements: Rectification ensures that financial statements accurately reflect the financial position of the business.
Trial balance and Rectification of Errors class 11 Question and Answer
Question:1 what are the methods of preparing trial balance ?
- Totals method: in this method the total of the debit and the credit side of the ledger is determined and presented separately in the trial balance.the total of both the sides should match as the accounts are based on double entry system.
- balances method: In this method, the balance of all ledger accounts are presented in their respective debit and credit column of the trial balance. the total of both the sides should match as the accounts are based on double entry system and this method of preparing a trial balance is widely used becuase it helps in the preparation of financial statement.
- Total cum-balance method: this method is a blend of the totals and balances method.this method has four columns the first two columns are to write the totals of the debits and credits of the various accounts and the other two columns are to write the debit or the credit balances of these accounts this method is time consuming and hence are not used widely.
Question:2 what kinds fo errors would cause difference in the trial balance ? also list examples that would not revealed by a trial balance ?
Answer: one-sided errors are the errors which when committed affect the agreement of the trial balance.these errors affect only one account and any one side i.e debit or thec credit side of the account errors of partial omission, recording transaction with wrong amount,casting posting of incorerct amount are examples of one-side errors.
two sided errors do not affect the agreement of the trial balance here, are a few examples which would not be revealed in a balance.
- Purchase from Mr. shah completely omitted to be recorded in the purchase book
- purchase made from vijesh, recorded in ritesh’s accunt who is another creditor.
- stationary purchased for office use recorded in the purchase book.
Question:3 what are the different types of errors that are usually committed in recording business transaction?
- Errors of commission: The errors that are committed because of wrong posting of tansaction, wrong balancing of accounts, wrong casting of subsidary books. wrong totaling or wrong recording of amount in the books are error of commission.these errors affect the agreement of the trial balance.
- Errors of Omission: these errors are of two types and are committed when a transactions is partially or completely omitted to be recorded in the books.
- Error of complete omission-when a transaction is completely omitted to be recorded in the books of account or to be posted in the respective ledgers, it is an error of complete omission such error do not affect the agreement of the trial balance.
- Error of partial omission-when a transaction partially omitted while recording in the books or amounts or partially omitted from posting in the ledger. it is an error of partial omission such error affect the agreement of the trial balance.
- Errors of principle : Accounting transactions are to be recorded following certain principles if any of the principle of accounting entries are violated or ignored and the error occuring due to such violation is called error of principles.
- Compensating error: when two or more error are committed in such a way that the net effect of these error on the debits and credits of accounts is nill, such error are callled compensating error.
Trial balance and Rectification of Errors class 11 Numerical Question and Answer
Question:1 The trial balance of XYZ Company on December 31, 20X1, showed a difference of ₹15,000. After investigation, it was found that sales of ₹5,000 were completely omitted. Rectify the error and prepare a corrected trial balance.
Explanation: In the original trial balance, there was a discrepancy of ₹15,000, and upon investigation, it was discovered that sales worth ₹5,000 were entirely omitted. To rectify this error, we need to add the omitted sales to the Sales account in the corrected trial balance. This addition will balance the accounts and correct the discrepancy.
Question:2 An expense of ₹2,000 was incorrectly recorded as ₹20,000. Rectify the error and adjust the trial balance.
Explanation: In the original trial balance, an expense entry was mistakenly recorded as ₹20,000 instead of the correct ₹2,000. To rectify this error, we need to correct the expense entry to its accurate amount in the corrected trial balance.
Question:3 Rectify the following errors.
- Credit sales to Mohan Rs 7,000 were recorded as Rs, 700
- Credit purchases from Mohan Rs, 9,000 were recorded as Rs, 9,00
- Goods returned To Rakesh Rs, 4,000 were recorded as Rs, 400
- Goods returned from Mahesh Rs, 1,000 were recorded as Rs, 100
Rectification journal entries
|Mohan’s A/c —————Dr
To sales A/c
(Being: credit sales to Mohan Rs 7,000 wrongly recorded as Rs 700, now rectified )
|purchases A/c ————–Dr
To Rohan’s A/c
(being credit purchase from Rohan Rs, 9,000 wrongly recrded as Rs, 900, now rectified )
|Rakesh’s A/c —————Dr
To purchases return A/c
(being: goods returned to rakesh Rs 4000 wrongly recorded as Rs 400, now rectified )
|sales Return A/c —————–Dr
To Mahesh’s A/c
(Being: goods returned from Mahesh Rs 1000 wrongly recorded as Rs, 100 now recfified )
Question:4 Rectify the following errors and ascertain the amount of difference in trial balance by preparing suspense account.
- Credit sales to Mohan Rs 7,000 were posted as Rs 9,000
- Credit purchases from Rohan Rs 9,000 were posted as Rs 6,000
- Goods returned to Rakesh Rs 4,000 were posted Rs, 5,000
- Goods returned from Mahesh Rs, 1,000 were posted as Rs, 3000
- cash sales Rs, 2,000 were posted as Rs, 200
Rectification journal entries
|suspense A/c ——————-Dr
To Mohan’s A/c
(Being: credit sales to Mohan were not posted in Mohan’s account, now rectified)
|suspense A/c ——————-Dr
To Rohan’s A/c
(being: purchases from Rs 9,000 wrongly posted as Rs, 6,000 now rectified )
|suspense A/c ——————–Dr
To Rakesh’s A/c
|Mahesh’s A/c —————–Dr
To suspense A/c
(being: goods returned from Mahesh Rs, 1,000 wrongly posted as Rs, 3000)
To sales A/c
(being: cash sales of Rs, 2,000 wrongly posted as Rs, 200 now rectified )
|To Mohan A/c
|by Mahesh A/c
|by balance c/d
|To sales A/c
- Theory base of Accounting chapter 2
- Recording of transactions-1 chapter 3
- Recording of Transaction-2 chapter 4
In conclusion, understanding trial balance and rectification of errors is fundamental in maintaining the accuracy of financial records in accounting. The trial balance acts as a preliminary check, ensuring that the total debits equal the total credits and providing an opportunity to identify arithmetic errors. Rectification of errors involves correcting mistakes in accounting entries to produce reliable financial statements