balance but before preparing final accounts Stage : After preparing final accounts (i) Rectification of errors before preparing trial balance If the accountant finds time before preparing trial balance to recheck the entries made in the journal, postings in the ledger accounts, amounts carried forward and balancing of ledger accounts with the intention of ensuring their correctness, he/she will be able to locate and rectify the errors at that stage itself. (a) Rectification of one-sided errors before preparing trial balance When one-sided error is detected before preparing the trial balance, no journal entry is required to be passed in the books. In such cases, the error can be rectified by giving an explanatory note in the account affected as to whether the concerned account is to be debited or credited. Student activity Think: How many times in a year and at what intervals, the trial balance needs to be prepared?
Illustration (Errors in casting) The following errors were detected before the preparation of trial balance. Rectify them. (a) Sales book is undercast by ` (b) Sales book is overcast by ` (c) Purchases book is undercast by ` (d) Purchases book is overcast by ` Solution (a) Sales account should be credited with ` (b) Sales account should be debited with ` (c) Purchases account should be debited with ` (d) Purchases account should be credited with ` Tutorial Note: (a) In this case, the sales book is undercast by ` . The total of sales book is posted to the credit side of sales account in the ledger.
The undercasting has resulted in under- crediting of sales account by ` . This is an error of commission. The error is only in sales account. There is short credit in sales account by ` .
Hence, it is rectified by crediting sales account by ` . Accountancy Illustration (Errors in casting) The following errors were detected before preparation of trial balance. Rectify them. (a) Purchases returns book is undercast by ` .