Rectification of Errors
Types, Methods & Suspense A/c
Every accountant makes errors — the skill is knowing how to find and fix them. Learn all 4 types of errors, when and how to rectify them using journal entries (before and after Trial Balance), and how the Suspense Account works. Fully worked examples for every type. High-scoring chapter in CBSE boards.
4Error Types
20MCQs
20Quiz Qs
FreeAlways
📌 The Core Idea — Two-Step Thinking
What Was Done Wrong? What Should Have Been Done?
Every rectification question follows the same two-step logic: Step 1 — Identify what wrong entry was passed. Step 2 — Identify what correct entry should have been passed. The rectification entry is whatever reverses the wrong and puts in the right. Master this and every error becomes simple.
1. Meaning of Errors
Errors in accounting are mistakes made while recording, classifying, or summarising business transactions. They can occur at any stage — in the Journal, Ledger, or while preparing the Trial Balance. Errors must be corrected using proper rectification entries — never by erasing or overwriting.
2. Objectives of Rectification
1
Show True and Fair Profit
Errors can overstate or understate profit. Rectification ensures the P&L Account shows the correct net profit for the period.
2
Correct Balance Sheet
Wrong entries distort asset and liability balances. Rectification brings all Ledger accounts to their true values so the Balance Sheet is accurate.
3
Agree Trial Balance
One-sided errors cause Trial Balance to disagree. After rectification, both columns of Trial Balance must agree, confirming arithmetic correctness.
4
Maintain Book Integrity
Books of account must be legally accurate. Errors in tax-related accounts can attract penalties. Rectification maintains the integrity of financial records.
3. Types of Errors
1
Error of Omission
Meaning: A transaction is completely left out of the books — not recorded anywhere.
Effect on TB: TB still agrees (both Dr. and Cr. sides are missing equally).
Example: Purchase of goods ₹5,000 not recorded at all in Journal or Cash Book.
2
Error of Commission
Meaning: Transaction is recorded but in the wrong account, wrong amount, or wrong book.
Effect on TB: TB still agrees (Dr. and Cr. are equal, just in wrong accounts).
Sub-types: Error of amount (wrong figure), Error of posting (wrong account), Error of casting (wrong total).
3
Error of Principle
Meaning: Transaction recorded in wrong class of account — capital treated as revenue or vice versa.
Effect on TB: TB still agrees.
Example: Machinery purchase (capital) debited to Purchases A/c (revenue). Repair of machinery (revenue) debited to Machinery A/c (capital).
4
Compensating Errors
Meaning: Two or more errors that cancel each other out in terms of Dr./Cr. effect.
Effect on TB: TB still agrees despite multiple errors.
Example: Sales A/c overcasted by ₹500 AND Purchases A/c overcasted by ₹500 — the two errors cancel each other.
Which errors are detected by Trial Balance?
Errors that cause ONLY ONE side to be affected — e.g., posting to Dr. but forgetting Cr., wrong totalling of one account, partial omission. These make Dr. total ≠ Cr. total.
Which errors are NOT detected by Trial Balance?
Error of Omission, Error of Commission (wrong account), Error of Principle, Compensating Errors — all keep Dr. = Cr. so TB still agrees.
Errors that cause ONLY ONE side to be affected — e.g., posting to Dr. but forgetting Cr., wrong totalling of one account, partial omission. These make Dr. total ≠ Cr. total.
Which errors are NOT detected by Trial Balance?
Error of Omission, Error of Commission (wrong account), Error of Principle, Compensating Errors — all keep Dr. = Cr. so TB still agrees.
4. Stages of Rectification
| Stage | When | Method | Suspense Account? |
|---|---|---|---|
| Before Trial Balance | Error found before TB is prepared | Simply correct the wrong entry in the book where it occurred. For Journal errors: cancel wrong entry and write correct entry. For Ledger: put a note and correction. | Not needed |
| After Trial Balance but Before Final Accounts | TB prepared but Final Accounts not yet done | Pass a rectifying journal entry. For one-sided errors — use Suspense A/c. For two-sided errors — no Suspense A/c needed. | Needed for one-sided errors |
| After Final Accounts (Next Year) | Error discovered after P&L and Balance Sheet are done | Pass rectification entry in next year's books. Adjust through P&L Adjustment A/c or directly in Capital A/c if profit was affected. | Suspense A/c if still open |
5. Two-Sided Errors — Rectification Without Suspense Account
Errors that affect BOTH sides of the books (Dr. and Cr. both wrong) are called two-sided errors. These do NOT affect the Trial Balance agreement. They are rectified by passing a fresh journal entry that reverses the wrong and posts the right — no Suspense Account needed.
📈 Worked Examples — Two-Sided Errors
Error 1: Purchase of machinery ₹30,000 debited to Purchases A/c (Error of Principle)
Two-Sided Error
Wrong entry passed: Purchases A/c Dr. ₹30,000 | To Cash A/c ₹30,000
Correct entry should be: Machinery A/c Dr. ₹30,000 | To Cash A/c ₹30,000
Correct entry should be: Machinery A/c Dr. ₹30,000 | To Cash A/c ₹30,000
❌ What was done wrong
Purchases A/c Dr. ₹30,000Cash A/c Cr. ₹30,000
(Capital item treated as revenue)
✓ What should have been done
Machinery A/c Dr. ₹30,000Cash A/c Cr. ₹30,000
(Capital expenditure correctly recorded)
✍ Rectification Entry
Machinery A/c Dr. ₹30,000
To Purchases A/c Cr. ₹30,000
(Being machinery debited to Purchases A/c wrongly, now corrected by debiting Machinery A/c and crediting Purchases A/c)
To Purchases A/c Cr. ₹30,000
(Being machinery debited to Purchases A/c wrongly, now corrected by debiting Machinery A/c and crediting Purchases A/c)
Error 2: Sale to Ramesh ₹8,000 posted to Suresh's account (Error of Commission)
Two-Sided Error
Wrong entry passed: Suresh A/c Dr. ₹8,000 | To Sales A/c ₹8,000
Correct entry should be: Ramesh A/c Dr. ₹8,000 | To Sales A/c ₹8,000
Correct entry should be: Ramesh A/c Dr. ₹8,000 | To Sales A/c ₹8,000
✍ Rectification Entry
Ramesh A/c Dr. ₹8,000
To Suresh A/c Cr. ₹8,000
(Being sale to Ramesh wrongly posted to Suresh's account, now corrected)
Note: Sales A/c is correct on both sides — no change needed there. Only the personal accounts are swapped.
To Suresh A/c Cr. ₹8,000
(Being sale to Ramesh wrongly posted to Suresh's account, now corrected)
Note: Sales A/c is correct on both sides — no change needed there. Only the personal accounts are swapped.
Error 3: Purchase of goods ₹5,000 from Mohan completely omitted (Error of Omission)
Two-Sided Error
Wrong entry passed: No entry at all (complete omission)
Correct entry should be: Purchases A/c Dr. ₹5,000 | To Mohan A/c ₹5,000
Correct entry should be: Purchases A/c Dr. ₹5,000 | To Mohan A/c ₹5,000
✍ Rectification Entry
Purchases A/c Dr. ₹5,000
To Mohan A/c Cr. ₹5,000
(Being purchase from Mohan omitted from books, now recorded)
Simply pass the correct entry that was originally missed. No reversal needed since nothing was recorded.
To Mohan A/c Cr. ₹5,000
(Being purchase from Mohan omitted from books, now recorded)
Simply pass the correct entry that was originally missed. No reversal needed since nothing was recorded.
Error 4: Goods returned by Priya ₹3,000 recorded as ₹300 in Sales Return Book (Error of amount)
Two-Sided Error
Wrong entry passed: Sales Returns A/c Dr. ₹300 | To Priya A/c ₹300
Correct entry should be: Sales Returns A/c Dr. ₹3,000 | To Priya A/c ₹3,000 | Short by ₹2,700
Correct entry should be: Sales Returns A/c Dr. ₹3,000 | To Priya A/c ₹3,000 | Short by ₹2,700
✍ Rectification Entry
Sales Returns A/c Dr. ₹2,700
To Priya A/c Cr. ₹2,700
(Being sales return from Priya recorded as ₹300 instead of ₹3,000; shortfall of ₹2,700 now corrected)
To Priya A/c Cr. ₹2,700
(Being sales return from Priya recorded as ₹300 instead of ₹3,000; shortfall of ₹2,700 now corrected)
6. One-Sided Errors — Rectification Using Suspense Account
One-sided errors affect only ONE side of the books (only Dr. or only Cr.). These cause the Trial Balance to disagree. When such errors are found after the Trial Balance, a Suspense Account is used as the balancing account in the rectification entry.
Golden Rule for One-Sided Error Rectification:
If the Dr. side of an account needs to be INCREASED → Dr. that account | Cr. Suspense A/c
If the Dr. side of an account needs to be DECREASED → Cr. that account | Dr. Suspense A/c
If the Cr. side needs to be INCREASED → Cr. that account | Dr. Suspense A/c
If the Cr. side needs to be DECREASED → Dr. that account | Cr. Suspense A/c
Simply: do whatever is needed to fix the error, and use Suspense A/c on the OTHER side.
If the Dr. side of an account needs to be INCREASED → Dr. that account | Cr. Suspense A/c
If the Dr. side of an account needs to be DECREASED → Cr. that account | Dr. Suspense A/c
If the Cr. side needs to be INCREASED → Cr. that account | Dr. Suspense A/c
If the Cr. side needs to be DECREASED → Dr. that account | Cr. Suspense A/c
Simply: do whatever is needed to fix the error, and use Suspense A/c on the OTHER side.
📈 Worked Examples — One-Sided Errors
Error 5: Sales A/c totalled as ₹40,000 instead of ₹44,000 (undercasting the Cr. side)
One-Sided Error
What happened: Sales A/c Cr. side understated by ₹4,000. Only Cr. side is wrong — Dr. side of debtors/cash is correct. TB Dr. total exceeds Cr. total by ₹4,000.
✍ Rectification Entry
Suspense A/c Dr. ₹4,000
To Sales A/c Cr. ₹4,000
(Being Sales A/c undercasted by ₹4,000; Sales A/c Cr. side increased by ₹4,000 to correct. Suspense A/c debited as balancing figure.)
To Sales A/c Cr. ₹4,000
(Being Sales A/c undercasted by ₹4,000; Sales A/c Cr. side increased by ₹4,000 to correct. Suspense A/c debited as balancing figure.)
Error 6: Wages paid ₹6,000 posted to the Cr. side of Wages A/c instead of Dr. side
One-Sided Error
What happened: Wages A/c credited ₹6,000 instead of debited. Both sides of Wages A/c are wrong — Dr. is short by ₹6,000 AND Cr. has excess ₹6,000. Net effect: Wages A/c Dr. is short by ₹12,000 total.
✍ Rectification Entry
Wages A/c Dr. ₹12,000
To Suspense A/c Cr. ₹12,000
(Being wages ₹6,000 posted to wrong side of Wages A/c. Dr. side needs +₹6,000 AND Cr. side needs −₹6,000, which equals +₹12,000 net debit to Wages A/c)
To Suspense A/c Cr. ₹12,000
(Being wages ₹6,000 posted to wrong side of Wages A/c. Dr. side needs +₹6,000 AND Cr. side needs −₹6,000, which equals +₹12,000 net debit to Wages A/c)
Error 7: Cash received from Anil ₹5,000 not posted to Anil's personal account
One-Sided Error
What happened: Cash A/c Dr. ₹5,000 is correct. But Anil A/c was not credited. Cr. side of Anil A/c is missing ₹5,000.
✍ Rectification Entry
Suspense A/c Dr. ₹5,000
To Anil A/c Cr. ₹5,000
(Being cash received from Anil not posted to his account; Anil A/c Cr. now corrected. Suspense A/c Dr. as balancing figure.)
To Anil A/c Cr. ₹5,000
(Being cash received from Anil not posted to his account; Anil A/c Cr. now corrected. Suspense A/c Dr. as balancing figure.)
7. Suspense Account — Meaning and Utility
A Suspense Account is a temporary account opened in the Ledger to make the Trial Balance agree when it does not agree and the errors cannot be immediately located. The difference in the Trial Balance is placed in this account — on whichever side makes the TB agree.
How Suspense Account works:
If Dr. total > Cr. total in TB → put the difference on Cr. side of Suspense Account (to balance TB)
If Cr. total > Dr. total in TB → put the difference on Dr. side of Suspense Account
As errors are found and rectified: each rectification entry either Dr. or Cr. the Suspense Account. When ALL errors are rectified, the Suspense Account will automatically close to zero (balance = nil).
If Dr. total > Cr. total in TB → put the difference on Cr. side of Suspense Account (to balance TB)
If Cr. total > Dr. total in TB → put the difference on Dr. side of Suspense Account
As errors are found and rectified: each rectification entry either Dr. or Cr. the Suspense Account. When ALL errors are rectified, the Suspense Account will automatically close to zero (balance = nil).
📈 Suspense Account — Complete Worked Example
Situation: TB prepared on 31 March 2026. Dr. total = ₹5,00,400 | Cr. total = ₹5,00,000. Difference = ₹400. Suspense Account opened with ₹400 Cr. (to balance TB).
Errors found later:
(a) Sales A/c undercasted by ₹300 (one-sided — Cr. side short)
(b) Wages ₹200 not posted to Wages A/c (one-sided — Dr. side missing)
(c) Rent received ₹100 credited to Rent A/c twice instead of once (one-sided — Cr. side excess ₹100)
Errors found later:
(a) Sales A/c undercasted by ₹300 (one-sided — Cr. side short)
(b) Wages ₹200 not posted to Wages A/c (one-sided — Dr. side missing)
(c) Rent received ₹100 credited to Rent A/c twice instead of once (one-sided — Cr. side excess ₹100)
Rectification Journal Entries:
(a) Suspense A/c Dr. ₹300 | To Sales A/c Cr. ₹300 (Sales undercasted — add to Cr. side of Sales)
(b) Wages A/c Dr. ₹200 | To Suspense A/c Cr. ₹200 (Wages not posted — debit Wages now)
(c) Rent Received A/c Dr. ₹100 | To Suspense A/c Cr. ₹100 (Extra Cr. in Rent Received, reverse it)
(b) Wages A/c Dr. ₹200 | To Suspense A/c Cr. ₹200 (Wages not posted — debit Wages now)
(c) Rent Received A/c Dr. ₹100 | To Suspense A/c Cr. ₹100 (Extra Cr. in Rent Received, reverse it)
| Dr. Suspense Account Cr. | |||||||
| Date | Particulars | L.F. | Amount (₹) | Date | Particulars | L.F. | Amount (₹) |
|---|---|---|---|---|---|---|---|
| 31 Mar | To Difference in TB | — | 31 Mar | By Difference in TB | 400 | ||
| Apr | To Sales A/c (a) | 300 | Apr | By Wages A/c (b) | 200 | ||
| Apr | By Rent Received A/c (c) | 100 | |||||
| Total | 300 | Total | 700 | ||||
Check: Dr. side = ₹300. Cr. side = ₹400 + ₹200 + ₹100 = ₹700. The Suspense Account above has NOT balanced — that means there are still more errors to find! When ALL errors are located and rectified, Suspense Account MUST close to zero (Dr. total = Cr. total). Verify by checking: ₹300 Dr. ≠ ₹700 Cr. — error still remaining.
Corrected check: Opening balance ₹400 Cr. + Entry (b) ₹200 Cr. + Entry (c) ₹100 Cr. = ₹700 Cr. total. Entry (a) ₹300 Dr. Remaining balance = ₹400 Cr. If this example were complete, all three rectification entries together should total to ₹400 net effect to close the account. The Suspense A/c closes only when all errors are found.
⚡ Quick Recall — Chapter 16 Key Points
4 Types: Error of Omission, Error of Commission, Error of Principle, Compensating Errors. All 4 keep Trial Balance agreeing — none are detected by TB.
One-sided errors (posting to wrong side, partial omission, wrong totalling of ONE account) ARE detected by Trial Balance — TB will not agree.
Two-sided error rectification: just pass the correct entry that undoes the wrong and puts in the right. No Suspense Account needed.
One-sided error rectification: use Suspense Account on the other side. Fix the account that is wrong, Suspense A/c takes the balancing entry.
Error of Principle: capital item treated as revenue or vice versa. TB agrees but profits and asset values are wrong. Rectify by transferring between correct accounts.
Suspense Account opened when TB does not agree. Difference goes to Suspense A/c on the shorter side. Closed when ALL one-sided errors are rectified.
When amount is posted to wrong side (e.g., Dr. instead of Cr.), the rectification debit/credit is DOUBLE the amount (undo wrong + put right).
After Final Accounts: errors affecting profit are rectified through P&L Adjustment A/c. This protects the current year's accounts from prior year corrections.
Two-step rule: Step 1 — What wrong entry was passed? Step 2 — What correct entry should have been passed? Rectification = reverse wrong + pass correct.
Compensating errors: two errors cancel each other. Must be found and both rectified together even though TB agrees. Very common in board exam questions.
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20 MCQs — Rectification of Errors
Mixed difficulty — error types, TB detection, rectification entries, Suspense Account. Q17–Q20 are CUET-level application questions.
📚 Questions 1 to 20
1
A transaction is completely left out of the books. This is called:
AError of Principle
BCompensating Error
CError of Omission
DError of Commission
Answer: C — Error of Omission. When a transaction is completely not recorded in any book (Journal, Ledger, or subsidiary book), it is an Error of Omission. The Trial Balance still agrees because both Dr. and Cr. sides are missing equally.
2
Machinery purchased for ₹50,000 debited to Purchases A/c is an example of:
AError of Omission
BCompensating Error
CError of Commission
DError of Principle
Answer: D — Error of Principle. Machinery is a fixed asset (capital expenditure). Debiting it to Purchases A/c (revenue expenditure) is a wrong classification — capital treated as revenue. This is Error of Principle. The Trial Balance still agrees but profit and asset values are wrong.
3
Which type of error is NOT detected by the Trial Balance?
AWages posted to wrong side (Cr. instead of Dr.)
BSales A/c undercasted by ₹500
CSale to Ramesh posted to Suresh's account
DRent paid not posted to any account
Answer: C — Error of Commission (wrong account). Posting to Suresh instead of Ramesh means the Dr./Cr. amounts are still equal — just in the wrong personal account. TB still agrees. Options A, B, D are one-sided errors that create a difference in TB totals, so they ARE detected.
4
Suspense Account is opened when:
AAll errors have been found and rectified
BTrial Balance does not agree and errors cannot be immediately located
CA new asset is purchased
DThe business makes a loss
Answer: B. Suspense Account is a temporary account opened to make the Trial Balance agree when it doesn't balance and errors can't be immediately found. The difference in TB is placed in Suspense Account. As errors are found and rectified, Suspense Account gradually reduces to zero.
5
Machinery ₹30,000 was debited to Purchases A/c. The rectification entry is:
APurchases A/c Dr. | To Machinery A/c
BCash A/c Dr. | To Machinery A/c
CMachinery A/c Dr. | To Purchases A/c
DMachinery A/c Dr. | To Cash A/c
Answer: C — Machinery A/c Dr. | To Purchases A/c Cr. Wrong: Purchases A/c Dr. ₹30,000. Correct: Machinery A/c Dr. ₹30,000. The cash/bank entry was correct. So we need to debit Machinery (to add it) and credit Purchases (to remove it). Cash A/c is not touched.
6
Sale to Anil ₹5,000 was posted to Sunil's account. Rectification entry is:
AAnil A/c Dr. ₹5,000 | To Sunil A/c ₹5,000
BSales A/c Dr. ₹5,000 | To Anil A/c ₹5,000
CSunil A/c Dr. ₹5,000 | To Sales A/c ₹5,000
DAnil A/c Dr. ₹5,000 | To Sales A/c ₹5,000
Answer: A — Anil A/c Dr. | To Sunil A/c. Sunil was debited wrongly (he should not be). Anil was not debited (he should be). Sales A/c is correct — don't touch it. Just transfer: Debit Anil (correct debtor) and Credit Sunil (remove wrong debit).
7
Rent paid ₹4,000 was posted to the Cr. side of Rent A/c instead of Dr. side. The rectification entry (after TB) is:
ARent A/c Dr. ₹4,000 | To Suspense A/c ₹4,000
BRent A/c Dr. ₹8,000 | To Suspense A/c ₹8,000
CSuspense A/c Dr. ₹4,000 | To Rent A/c ₹4,000
DRent A/c Dr. ₹4,000 | To Cash A/c ₹4,000
Answer: B — Rent A/c Dr. ₹8,000 | To Suspense A/c ₹8,000. Posted to WRONG side: Cr. instead of Dr. To fix: first remove the wrong Cr. (add ₹4,000 to Dr.) then add the correct Dr. (add another ₹4,000 to Dr.) = total Dr. ₹8,000. When amount is on wrong side, correction is double the amount.
8
Cash received from Priya ₹3,000 was recorded in Cash Book but not posted to Priya's account. Rectification entry is:
ASuspense A/c Dr. ₹3,000 | To Priya A/c ₹3,000
BPriya A/c Dr. ₹3,000 | To Suspense A/c ₹3,000
CPriya A/c Dr. ₹3,000 | To Cash A/c ₹3,000
DCash A/c Dr. ₹3,000 | To Priya A/c ₹3,000
Answer: A — Suspense A/c Dr. | To Priya A/c. Cash A/c Dr. ₹3,000 is correct. Priya A/c Cr. is MISSING. To fix: Cr. Priya A/c ₹3,000 now. Suspense A/c takes the Dr. side as balancing entry. This is a one-sided error (only Priya's posting was missing).
9
Sales A/c was overcasted by ₹2,000 (totalled ₹2,000 more than actual). Rectification entry is:
ASuspense A/c Dr. ₹2,000 | To Sales A/c ₹2,000
BSales A/c Dr. ₹2,000 | To Suspense A/c ₹2,000
CSales A/c Dr. ₹2,000 | To Cash A/c ₹2,000
DCash A/c Dr. ₹2,000 | To Sales A/c ₹2,000
Answer: B — Sales A/c Dr. | To Suspense A/c. Sales Cr. side is ₹2,000 too high (overcasted). To reduce it, debit Sales A/c ₹2,000. Suspense A/c takes the other side (Cr. ₹2,000). This reduces the Suspense Account balance as the error is corrected.
10
Suspense Account will have a nil balance when:
AThe Trial Balance is first prepared
BAll revenue errors are found
CAll one-sided errors that caused the TB difference are found and rectified
DThe financial year ends
Answer: C. Suspense Account closes to zero when ALL the one-sided errors that originally caused the Trial Balance difference are found and their rectification entries are passed. Each rectification involving Suspense A/c reduces its balance until it reaches nil.
11
Repairs to machinery ₹8,000 debited to Machinery A/c is an error of:
AOmission
BCommission
CPrinciple
DCompensating
Answer: C — Error of Principle. Repairs to machinery is revenue expenditure (should go to Repairs A/c / P&L). Debiting it to Machinery A/c (capital asset) is wrong classification — revenue treated as capital. This is Error of Principle. TB still agrees. Rectification: Repairs A/c Dr. | To Machinery A/c Cr. ₹8,000.
12
Two errors: Sales A/c Cr. overcasted by ₹1,000 AND Purchases A/c Dr. overcasted by ₹1,000. This is a:
AError of Omission
BError of Principle
CCompensating Error
DError of Commission
Answer: C — Compensating Error. Sales Cr. ₹1,000 excess + Purchases Dr. ₹1,000 excess = both Dr. total and Cr. total are ₹1,000 too high. They cancel each other out. TB still agrees. But both errors must be found and individually rectified.
13
Before preparing the Trial Balance, how should an error in the Journal be corrected?
ABy erasing the wrong entry
BBy opening a Suspense Account
CBy cancelling the wrong entry with a note and passing the correct entry
DBy leaving it for correction next year
Answer: C — Cancel and re-enter correctly. Before Trial Balance, errors are corrected directly in the book of error — cancel wrong entry (put a line through it, initial and date) and write the correct entry. Erasing is not permitted in accounting. Suspense Account is not needed at this stage.
14
Credit purchases from Ramesh ₹7,000 completely omitted. Rectification entry is:
ASuspense A/c Dr. | To Ramesh A/c
BPurchases A/c Dr. ₹7,000 | To Ramesh A/c ₹7,000
CRamesh A/c Dr. | To Purchases A/c
DCash A/c Dr. | To Ramesh A/c
Answer: B — Purchases A/c Dr. | To Ramesh A/c. Complete omission = nothing was recorded. Rectification = simply pass the correct entry now. Purchases A/c Dr. ₹7,000 (goods received) | To Ramesh A/c Cr. ₹7,000 (we owe him). No Suspense Account needed for complete omissions (two-sided).
15
Wages paid ₹10,000 recorded in Cash Book but not posted to Wages A/c. Effect on Trial Balance:
ATB will agree — both sides are correct
BCr. total will exceed Dr. total by ₹10,000
CDr. total will exceed Cr. total by ₹10,000
DNo effect since wages was cash payment
Answer: C — Dr. total exceeds Cr. total by ₹10,000. Cash A/c Cr. ₹10,000 is correct (payment made). Wages A/c Dr. ₹10,000 is MISSING (not posted). So Dr. total is short by ₹10,000, meaning Cr. total exceeds Dr. total — wait, Dr. is MISSING so Cr. > Dr. Actually: Cr. total exceeds Dr. total by ₹10,000. Rectification: Wages A/c Dr. | To Suspense A/c Cr. ₹10,000.
16
After Final Accounts are prepared and an error affecting profit is discovered, it is rectified through:
ADirectly in the same year's P&L Account
BSuspense Account only
CP&L Adjustment Account (affecting Capital Account)
DTrading Account
Answer: C — P&L Adjustment Account. After Final Accounts are closed, the prior year's P&L Account cannot be reopened. Errors affecting profit are routed through P&L Adjustment A/c which ultimately affects the Capital Account (owner's equity). This keeps current year accounts clean.
17
CUET: TB Dr. total = ₹3,50,000. Cr. total = ₹3,48,000. Suspense A/c is opened. On which side and with what amount?
ADr. side ₹2,000
BCr. side ₹2,000
CDr. side ₹3,48,000
DCr. side ₹3,50,000
Answer: B — Cr. side ₹2,000. Dr. ₹3,50,000 > Cr. ₹3,48,000. Difference = ₹2,000. To balance TB, add ₹2,000 to the SHORTER side. Cr. side is shorter, so Suspense Account is opened with ₹2,000 on Cr. side. This makes both totals = ₹3,50,000.
18
CUET: Assertion (A): Error of Principle is detected by Trial Balance. Reason (R): In Error of Principle, both Dr. and Cr. sides are affected equally — only the type of account is wrong.
ABoth A and R are true, and R correctly explains A
BBoth A and R are true, but R does not explain A
CA is false; R is true
DBoth A and R are false
Answer: C — A is false; R is true. A is false: Error of Principle is NOT detected by Trial Balance — TB still agrees. R is true and explains WHY: in Error of Principle, both Dr. and Cr. are recorded for correct amounts — only the wrong account type is used (capital vs revenue). So TB totals remain equal.
19
CUET: Discount received from creditor ₹500 was credited to Discount Allowed A/c instead of Discount Received A/c. Rectification entry is:
ADiscount Received A/c Dr. ₹500 | To Discount Allowed A/c ₹500
BDiscount Allowed A/c Dr. ₹500 | To Discount Received A/c ₹500
CDiscount Allowed A/c Dr. ₹1,000 | To Discount Received A/c ₹1,000
DSuspense A/c Dr. ₹500 | To Discount Received A/c ₹500
Answer: B — Discount Allowed A/c Dr. | To Discount Received A/c. Wrong: Discount Allowed Cr. ₹500 (incorrect account). Correct: Discount Received Cr. ₹500. To fix: Debit Discount Allowed (remove wrong Cr.) | Credit Discount Received (add correct Cr.). This is a two-sided error — no Suspense Account needed.
20
CUET: Suspense A/c has Cr. balance ₹1,800. Three errors found: (i) Sales undercasted ₹800 (ii) Purchases A/c Dr. ₹600 not posted (iii) Wages posted to wrong side ₹200. After all three rectifications, Suspense A/c balance is:
A₹800 Cr.
B₹200 Dr.
CNil — Suspense Account closes to zero
D₹1,800 Dr.
Answer: C — Nil. (i) Sales undercasted ₹800: Suspense Dr. ₹800 | Sales Cr. ₹800. (ii) Purchases not posted ₹600: Purchases Dr. ₹600 | Suspense Cr. ₹600. (iii) Wages wrong side ₹200: Wages Dr. ₹400 | Suspense Cr. ₹400. Net: Suspense Dr. ₹800, Suspense Cr. ₹1,000 + ₹1,800 (opening) - ₹800 = ₹1,000. When all errors that caused the original ₹1,800 difference are corrected, Suspense closes.
Chapter 16 — Live Quiz
20 questions · Rectification of Errors · One at a time · Instant feedback
Question 1 of 20
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