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Summary

Types of error are:
  • Errors of principle (Trail Balance agrees)
  • Errors of omission
     
    – Error of complete omission (Trial Balance agrees)
     
    – Error of partial omission (Trial Balance will not agree)
  • Errors of commission
     
    – Error of posting (Trial Balance will agree (wrong posting in subsidiary book) or may not agree (posting wrong amount or wrong side))
     
    – Error of casting (Trial Balance will not agree)
  • Compensating errors (Trail Balance agrees)
Errors can be rectified at three stages:
  • Before preparing of trial balance
  • After preparing Trial Balance but before preparing Final accounts via Suspense Account
  • After preparing Final accounts via Profit and loss Adjustment account (for those accounts appearing in Trading and Profit and Loss account) and respective account (for those accounts appearing in Balance Sheet)




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