It is common to have errors in accounting work because it contains many rules, principles, concepts, etc. due to which sometimes they are not followed, but it is very important to correct these errors because if this is not done, accounting standards will be violated and accounting reports will also not be prepared correctly, so accounting errors are corrected by using the concept of rectification of errors.
Different people may have different opinions on how to correct accounting errors, but all opinions are according to accounting standards. Usually, to correct accounting errors, first the errors are detected and then they are divided according to their nature and then they are corrected according to their nature.
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How to rectify accounting errors?
How to rectify accounting errors is described below:
Accounting errors are corrected by a process that includes identification, classification and correction and is also called the process of rectification of errors.
| 1. Identifying | 2. Classifying | 3. Rectifying |
1. Identifying:
In this process, accounting errors are detected because to correct accounting errors, it is necessary to detect accounting errors first. Accounting errors can be detected in many ways such as by auditing, reconciling accounts, preparing trial balance, preparing balance sheet, etc. There are many errors which are not easy to detect, and many errors can be detected easily.
2. Classifying:
Once the errors are detected or located, they are classified according to their nature, such as error of principle, error of commission, error of omission, compensating error, etc. The errors are classified so that they can be understood, and the correct method can be used to correct them.
3. Rectifying:
When errors are classified according to their nature, they are corrected using the respective method. For example, if a transaction is forgotten to be entered then the transaction is entered, if a wrong amount is entered then a journal entry is passed for the balance*, if a wrong account is debited or credited then the correct account is debited or credited with the help of a journal entry, etc.
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QNA/FAQ
Q1. Are accounting errors corrected through the process?
Ans: Yes, accounting errors are corrected through the process.
Q2. What are the steps involved in the process of rectifying accounting errors?
Ans: The process of rectifying accounting errors involves the following steps:
1. Identifying
2. Classifying
3. Rectifying
Q3. How are accounting errors corrected?
Ans: Accounting errors are rectified as per the concept of rectification of errors.
Q4. What happens in the rectifying stage?
Ans: In the rectifying stage the errors are corrected using respective methods.
Q5. On what basis are the errors classified in the classification stage?
Ans: In the classification stage the errors are classified based on their nature.
