Correction of Errors

Errors and omissions may occur in the recording of transactions and incidents in the primary
books, in copying to the leper and in balancing the ledger accounts.

Reasons why these happen

 Carelessness
 Avoidance due to ignorance
 The purpose of deliberate fraud is that if these errors are not corrected, the financial
statements that are prepared will ultimately provide incorrect information.

Errors in transaction reporting

Errors detected in checking

Undetected Errors in Check
balances / Errors affecting
Balance / Errors not
equality of check balances
affecting equality of Check
Balance

Error correction Fixed a bug associated with

the Uncertain Account

General Journal

Impact on profitability

Effect on financial position

K. A. Kasun Tharidu 1 Accounting

Cases in which errors may occur in Accounting

1. At the time of preparation of source documents

2. At the time of entry of data in primary books

3. At the time of copying from primary books into leprosy

4. At the time of balancing the accounts of primary books and leper

5. At the time of preparation of balance check

6. At the time of preparation of final accounts

Types of Errors

1. Abandoning a knowledge fully taken

2. Taking more numbers

3. Reporting the same note twice

4. Taking a wrong number to the wrong side of the correct ledger account

5. Taking the wrong number to the wrong side of the wrong ledger account

6. Taking a wrong figure to the correct side of the wrong ledger account

7. Error in extracting balance for balance check

Misclassification

01. Errors that do not affect the balance of the check balance

Errors may exist in the books of accounts even when the debit and credit balances in the trial
balance are equal. These types of errors are called errors that do not affect the balance of the
check balance.

These types of errors are detected through audit of accounts or during internal or external audits
or incidentally.

In this way, the errors that are not detected by the balance check can be stated as follows.

 Redundancy errors
 Omission errors

K. A. Kasun Tharidu 2 Accounting

  Offset errors
 Fundamental errors
 Binary errors

Redundancy Errors

Errors are caused due to recording more or less than its fair value in the basic books.

Example: Rs. 6500 Sales on credit Rs. 5600 in the sales journal entry

Omission Errors

Mistakes are due to complete omission from the books of accounts.

Example : Credit sales of Rs.10,000, completely omitted from the sales journal

Offset Errors

Any error which should be disclosed by the balance check is not detected by the balance check
due to some error or errors of similar amount made in other accounts. These types of errors are
offset errors.

Example: Debit control account has a shortfall of Rs.6,000 and creditor control account
has a shortfall of Rs.6,000.

Fundamental Errors

Here, transactions that are against the accounting principles are accounted for. That is, it is a
fundamental error to account for a capital expenditure as a capital expenditure.

Example: The value of the photocopier purchased for office use for Rs.100,000 has
been recorded in the office expense account.

Bifurcation Errors

Bifurcation errors are the same transaction in the books or ledger accounts is recorded twice.

Example: A sales invoice of Rs.50,000 is recorded twice in the sales journal

02. Errors affecting balance check.

Some Accounting Mistakes The sum of the debit column in the NCC balance check is not equal
to the sum of the credit column.

K. A. Kasun Tharidu 3 Accounting

In such a case, the difference is recorded in a temporary account called the suspense account
until the related mistakes are found and rectified.

If it is a mistake that affects the inequality of the other balance check, when the mistake is
made, one note of it should be taken to the uncertain account. That is, the entries against the
adjustment to be made from the account concerned to correct the mistake are transferred to the
suspense account.

Errors affecting change the total balance of Trail Balance

In a double entry of a transaction, only one entry is entered and the other entry is
omitted.

Example : An amount of Rs.5,000 paid to a creditor was credited to the cash control
account but not debited to the creditor control account.

 A double entry of a transaction is entered correctly in one account while the wrong
number is entered in the other account.

Example : An amount of Rs.3,200 received from a debtor has been correctly debited in
the cash control account and credited as Rs.2,300 in the debtor's account.

 Double entries of a transaction are recorded on the same side of both the respective
accounts.

Example : An amount of Rs.5,000 received from a debtor has been correctly debited to
the Cash Control Account which has also been debited to the Debtor Control Account.

 Mistakes in extracting account balances and preparing balance checks

Example: Entering balance of Rs.5,000 in telephone expense account as Rs.500 in

balance check

 Addition errors

Example: The total of sales pernal has been collected more than Rs.700

K. A. Kasun Tharidu 4 Accounting

Errors occurring in balance check while extracting to ledger account balance
check

Here the relevant errors affect the balance check and accordingly they should be corrected
according to the balance check. But since the balance check is not an account, the balance
check should be given priority in correcting the related mistakes.

Examples:

Leprosy insurance charge account balance 2,000 not reported in balance check Leprosy
telephone charge account balance as Rs.500, extract to balance check as Rs.5,000

In the ledger, the balance of House Rent Income account Rs.4,000 is recorded on the wrong
side of the balance check.

(01) Explain the following terms and give an example each.

i. Redundancy errors
ii. Omission errors
iii. Offset errors
iv. Fundamental errors
v. Binary errors

(02) 2023.03.31…………………The balance check extracted from the books of the

business was balanced and then the following errors were identified.

1. Rs. 15 200 borrowings, completely off the books.

2. At the daily purchase window entry Rs. 300 000 more had been collected.
3. Made to Sameera Rs. 57 000 in both the Sales Debtors Control Account and
Sales Accounts Rs. 75 000 was recorded.
4. Purchases of Rs. 50 000. It goes to the account and posting to the repair
account.
Rs. 15 000 double entry of credit received for returns in return channel.
Required:
i. Journal Notes for Correction of Mistakes
ii. Identify to which category the above errors belong

K. A. Kasun Tharidu 5 Accounting

 ( 03) Show the double notes required to correct each of the following errors
1. Rs. 300 000 purchase inash vice completely missed
2. Rs. 200 000 purchases have been copied to the respective accounts twice
3. Car repair expenses Rs. 30 000 to the car account
4. Received from a customer to the bank Rs. 80 000 no note has been kept.

(04) ……………….In the balance check prepared by the business on 31.03.2023

Debit and Credit Since the sum of the columns was not equal to each other, the
difference was Rs. 5 500 was credited to suspense account.

The following errors were found during subsequent inspection.

1. The sum of the debit side of the telephone charges account is Rs. 5 000 underwritten.
2. Paid for building repairs Rs. 30 000 has been correctly recorded in the cash control
account and debited to the building account.
3. Cashed for purchase Rs. 45 000 has been debited in the cash control account but the
purchase account has been debited with Rs. 54 000 as.
4. Rs. 5000 in the salary account balance is shown in the balance check as Rs. 500 as.
50 Credit side of sales account Rs. 6 000 less is collected.
Required:
(1) Journal entries of new offenses mentioned above
(2) Preparation of suspense account showing opening balance

05) ………………The following errors were found in the campaign.

1. Rs. 10 000 bank overdraft is recorded on the wrong side in the balance check
2. Goods purchased for Rs.151,000 were recorded as Rs.515,000 in the purchase
account.
3. The total in the daily sales book was under-calculated by Rs.50,000. (Based on the
borrower's current balance, the institution has a 5% margin for outstanding loans.)
4. Intent paid Rs.110,000 was recorded as Rs.11,000 in the intent account.
5. Stock worth Rs.300,000 was stolen during the year. The company paid Rs.225,000
to cover this loss. No accounting entries were kept in the books of accounts regarding
the deposit of the amount received in the owner's personal bank account.
Required:
(1) Journal entries including money to correct these errors

K. A. Kasun Tharidu 6 Accounting

(06)……………….The difference in the checking balance of the business is entered in a
suspense account. The following errors were found during subsequent inspection.

1. House rent paid Rs. 30,000 house rent has been credited to that account.
2. For an existing building Rs. Another section was added at a cost of 80,000. It was
debited to the building new account.
3. Paid to a creditor Rs. 25 000 is entered * in the general ledger as a sum received from
a debtor.
4. Phone charge account balance Rs. 6000 balance not checked.
5. Paid Rs. 3 000 has been debited to the telephone charges account for assessment
charges.

Borrowed from a creditor of Rs. 14 000 has been recorded in the purchase window of Rs. As
1400.
1. Catering expenses Rs. 3 500 is indicated in the credit column of the balance check.
2. Sold to Fan Rs. 1 800 goods were entered in the sales window but not recorded in
the debtors control account.
3. The discount column given in the cash receipt window is Rs. 500 less have been
collected.
4. Paid house rent Rs. 58 000 is correctly recorded in the cash control account but the
house rent account has Rs. 5 800 has been credited.
Required:
(1) Prinal notes for correction of errors
(2) Contingent account
(07)……………………The following errors were found in the campaign.

1. Purchase of Manuscript Rs. 15 000 voucher is missing

2. In balancing the sales account, the sum of Rs.53,000 was recorded as Rs. 35,000 as
3.
The interest income account balance of Rs.8,500 is recorded on the debit side of the
balance check.
4. The debit side of the purchase account has recorded a decrease of Rs.5,000.

K. A. Kasun Tharidu 7 Accounting

 5. The balance of Rs.3,500 in the interest income account is shown as Rs.350 in the
balance check.
6. An expense of Rs.25,000 for car repairs has been recorded in the car account.
7. A check of Rs.34,000 received from sales is entered in the cash book as new, but in
the sales account as Rs.43,000.
8. Purchases of Rs.15,000 have been omitted from the accounts.
9. Goods of Rs.4,000 used by the owner for personal use have not been recorded in the
books.
10. Settlement of bank loan of Rs.20,000 is recorded in cash book only.

Required:
(1) Those who record the journal entries related to the above errors in the general
journal.
(2) Balance the suspense account and also indicate the opening balance of the suspense
account in the balance check.
(08)…………….. As on 31.03.2023 the following errors have been found. The balance check
of the business was uneven.
1. Transfers from Creditor Leper to Debtor Leper Rs. 1 500 has been recorded on the
wrong side of the Debtors Control Account
2. Daily purchase window Rs. More than 5,300 have been recorded.
3. A borrower sent Rs. 1 900 worth of goods has been credited to the returns account
but not recorded in the debtors control account.
4. For office use Rs. 25,000 worth of office equipment was purchased and credited to
Purchases account.
5. For car repair Rs. 4 600 to repair account Rs. 4 000 have been recorded.
6. Received from a borrower Rs. 9 The check for 500 was not correctly posted in the
cash control account but was posted in the debtors control account.
Required:
(1) Journal Notes for Correction of Mistakes
(2) Contingent account

K. A. Kasun Tharidu 8 Accounting

 (09)……………..In the balance check prepared on 31.03.2023 of the business, as the
total of the debit and credit columns were not equal, the difference Rs.5,500 was
credited to the unclaimed account. During the subsequent check, the following errors
were found.
1. The check of Rs.45,000 issued for purchases has been recorded in the bank
account as new, but the purchase account has been debited as Rs.54,000.
2. The total of Rs.5,000 has been recorded less on the debit side of the telephone
charges account.
3. Rs.30,000 paid for building repair was correctly recorded in the cash book and
debited to the building account as Rs.54,000.
4. Rs.5,000 teacher salary account balance, balance check shows Rs. 500 as.
5. Credit side of sales account Rs. 6,000 less has been collected. 6th purchase of
Rs.7,000 inal
A voice is missing from the books.
Required:
(1) General Journal Entries for reclassification of the above errors
(2) Contingent account

(10) Note the following accounting errors

1. Thushara, a debtor, received Rs. 5 400 is correctly recorded in the cash control
account but is recorded as 4 500 in his debtors control account.
2. Borrowed from Senaka Company Rs. 25,000 worth of goods at the purchase window
of Rs. 2 being recorded as 500.
3. Borrowed from Kamal Company Rs. 1 000 goods purchased, not recorded in the
purchase window.
4. Godage, a creditor, paid Rs. 15 000 to be recorded only in that control account.
5. Borrowing Rs. 60 000 to creditor control account Rs. 6 000 was recorded and the
salary paid was Rs. 40 000 is recorded only in cash control account.
6. The cost of converting the car to run on gas is Rs. 60 000 debited to car repair account.
7. Borrowed from Tharanga Company Rs. 7 000 items in the purchase window twice
8. Remittance to Perera Company Rs. 500 has been credited to the Return Account and
Creditor Control Account has also been credited.
9. Total return window Rs. 2 000 less collected.
10. The total on the debit side of the car account is Rs. 60 000 understated.

K. A. Kasun Tharidu 9 Accounting

 11. Electricity Charge Account Balance Rs. 8 400 to balance check Rs. Quoted as 4,800.
Required:
(1) Journal Entries for correction of errors
(2) Contingent account

(11)………………….. In the checking balance prepared on 31.03.2023 of the business,

the debit side was more than the credit side by Rs.23,200. Later, it was discovered that the
said mistakes had been made in the accounts.
1. The debit balance of the timber account Rs.25,000 has not been checked.
2. Rs.10,000 spent on car repair has been debited from car account.
3. Insurance charges paid Rs.1,200 not recorded in insurance charges account.
4. The discount given Rs.1,500 has been debited in the borrower's personal
account.
5. In the Creditor Control Account Rs. 49 The balance of 400 has not been
brought to the balance check
Required:
(1) Journal Entries for correction of errors
(2) Contingent account

(12)…………………… The balance of the business as on 31.03.2023 was not balanced,

the difference of Rs.1,300 was recorded on the credit side of the suspense account.
Inspection of books of account revealed the following errors.
1. The amount of Rs.3,000 received from a borrower has been recorded twice in
the books.
2. Rs.1,200 of the discount given was not copied to the balance check.
3. Paid house rent of Rs.1,250 has been debited in both the accounts.
Required:
(1) Journal Entries for correcting errors
(2) Contingent account

(13)…………………… As on 31.03.2023 the checking balance of the limited company

did not balance. The difference was transferred to a suspense account. Subsequent tests
revealed the following errors. The accounting year of this business ends on 31st March
every year.

K. A. Kasun Tharidu 10 Accounting

 1. Rs. 5 000 had been recorded as an expenditure in the Other Income, Other
Expenditure account.
2. Office expenses of Rs.160,000 paid on 01 October 2022 have been recorded
in the cash book, but it has been copied to the office equipment account as
Rs.106,000. At the end of the year, this item is depreciated at an annual rate of
10%.
3. Timber purchased for Rs.64,000 is recorded in Purchases Account.
4. The interest income of Rs.33,000 given during the month of December has
been correctly recorded in the cash book but has been copied to the interest
income account as Rs.3,300.
5. Sales to us of Rs.150,000 have been credited to the debtor control account.
This is correctly recorded in the cash book.
Required:
(1) Journal Entries required for correction of errors
(2) The suspense account as shown by the balance of the suspense account
before correction of errors.

(14)……………………. The checking balance of the business as on 31.03.2023 is not

balanced. A subsequent investigation revealed the following errors and omissions.
1. Rs. 500 000 bank loan and the 8% interest accrued on it has not been accounted for.
2. The stationery purchased for Rs.20,000 was sent to the office equipment account as
Rs.200,000. However, this is properly recorded in the cash book. On this Rs.200,000,
31.03.2023
Depreciation of Rs.40,000 has been provided for the year ended.
3. Employees' Provident Fund (J) contributions of Rs.45,000 and Rs.30,000 respectively
have been copied to the Employee Provident Fund expense account. These values are
copied to the Payable Employees Provident Fund account. The net salary paid to the
employees had been credited to the discretionary expenditure account.
4. Reverted sales in March amounting to Rs.50,000 have been copied to the return account
only the year. The company has already made a provision of 10% for half-term loans on
the last outstanding balance.
5. During the year Rs.30,000 which is the discount taken by the creditor has been debited
to the creditor control account and credited to the sales account.
Required:

K. A. Kasun Tharidu 11 Accounting

 (1) Journal Entries for necessary to correct these errors and omissions
(2) Balance of suspense account before correction of these errors and omissions

(15) …………………………The following are the mistakes made in placing. Accounts

of the business for the year ended 31.03.2023
1. Rs. 18 000 of inventory borrowed from Pasindu, in the purchase journal Rs. Marking 8
as 100.
2. Rs. 30 000 asanata to omit from the books a sale item on credit.
3. Rs. 12 000 Debiting Building Repairs to Buildings Account.
4. Rs. 2 000 electricity cost to be recorded twice in the basic books.
5. Rs. 4 000 in manual sales, the receipt of cash was not correctly recorded in the journal
and copied to the sales account and Rs. 24 000 payments to Ravindu are correctly recorded
in the Cash Payments Journal and in Ravindu's account
Rs. 20 000 as debit.
Required:
(1) Indicate the correcting journal entries for each of the above errors
(2) Draft net profit for the year ended 31.03.2023 of the business Preparation of a capital
gain correction document ot. 80 000

(16)……………… The following are some of the errors that occurred while keeping the
accounts. P. in the year ending 31.03.2023 of the business

1. The electricity cost of Rs.3,000 was recorded twice in Malka's books.

2. Complete omission from the books of a sales invoice of Rs.20,000 on credit to Devmi.
3. Debiting a building repair of Rs.10,000 to the building account.
4. Inventory borrowed from Avanta for Rs.18,000, recorded as Rs.8,100 in Purchases.
5. The balance of Rs.1,500 has not been carried over to the checking account.
6. Sales to us of Rs.4,000 were not recorded in the cash receipts journal and copied to the
sales account.
7. Debit Rs.400 paid as travel expenses to stationery expense account as Rs.4,000.
Required:
(1) Indicating new delinquency journal entry for each of the above errors

K. A. Kasun Tharidu 12 Accounting

 (2) Prepare the suspense account
(3) If the draft net profit of the business for the year ending on 31.03.2023 is
Rs.235,000, preparing a profit correction document of Rs.

(17)…………………………… Quoted on 31.03.2023. Then the following errors were

found. The company's balance sheet is uneven
1. Given to a Ganalu Dananun Rs. A discount of 12 000 was recorded in the Debtors
control account. Even so, the discount account received by Rs. 21 000 had been debited
2. The electricity bill of public leprosy is Rs. 2,000 less collected
3. Rs. 7,200 paid bank commission, has been copied twice to cash account
4. The receiving side of the cash account is Rs. 10,000 less collected
5. Rs. 15,260 to us, the sales account has been copied Rs. 12,560 as the 6th discount of Rs.
2,250 by crediting the wrongly received rebate account
It is necessary
(1) Journal entries correcting the above errors
(2) Opening balance of suspense account
(3) Previous profit Rs. 62,000 and a statement showing the correct profit after adjusting
for errors

(18)…………………..For the year ended 31.03.2023 of the business Rs. A profit of

750,000 has been recorded. However, the following errors were later discovered.
1. Stock on 31.03.2022 Rs. 50,000 had been overestimated.
2. Remittance Rs. 30,000 has been credited to the creditor control account and Rs. 3,000
only had been credited to the remittance account.
3. The discount given is Rs. 6,000 had been debited to the rebate account.
4. Value Added Tax (arrival) Rs. 1,200 including cash sales of Rs. 11,200 is credited
to Sales Account.
5. Interest expense for the year has been accounted for under Rs.5,000.
6. As on March 31, 2023, the net realizable value of stocks over cost is Rs. 25,000
decreased. However, in computing the profit for the year, the closing stock is valued at
cost.
What is needed is,

K. A. Kasun Tharidu 13 Accounting

 (1) Journal entries for correction of errors
(2) Profit for the year after correction of errors
(3) Increase or decrease in net assets after misclassification

(19)………………… The following errors were found in a business.

1. Deposited directly in the bank by a person who knows the value of Rs. 10,000 had been
considered and accounted as interest income
2. The total loan installment paid including the loan interest of Rs.2,000 has been debited
to the loan account of Rs.6,000.
3. The total of the discount column on the debit side of the cash book has been entered on
the wrong side of the relevant account in the general ledger is Rs.3,100.
4. Received as sales advance Rs. 12,000 has been debited to the Sales Account.
5. While preparing the balance check, the balance of general expenditure account of
Rs.16,000 has not been checked.
6. The amount of Rs.6,000 taken from the debtor has been debited to the creditor Ruwana's
account.
7. Discount received from creditor Kasun Rs.3,100 has been debited to discount account.
8. A total of Rs.16,000 in Sales Parnal has been debited to Sales Account.
9. The balance of Rs.8,000 in the building rent account advanced at the beginning of the
year was not recorded in the relevant books. need to are:

(1) Error correction window notes

(2) Preparation of Contingent Account
(3) Prepare profit revision register. (Net profit before correction of errors is Rs.30,800)

K. A. Kasun Tharidu 14 Accounting