RECTIFICATION OF ERRORS

Classification of Errors 

Keeping in view their nature , errors can be classified into following four categories :

1. Errors of Omission
2. Errors of Commission 
3. Errors of Principle
4. Compensating Errors 

1. Errors of Omission 

An Error of Omission is an Error when a transaction is complete or partially omitted from being recorded in the books of account.

2. Errors of Commission 

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

3. Errors of Principle 

When a transaction is recorded in contravention of accounting principles , it is known as an Errors of principles .

4. Compensating Errors 

Compensating Errors are those errors the effect of which is nullified by another errors of equal amount  

Rectification of errors 

Errors , wheather 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 the Profit and  Loss Account 

With the correct figures .

3. Exhibiting a true financial position of the concern at a particular date by preparing the Balance Sheet with the correct accounting data .