Accounting Errors and Rectification

 Credit Purchase of Goods is recorded in the Purchase Book.

 Wages paid for installation of furniture is a capital expense.

 No need to open Income Tax a/c for the payment of Income Tax.

 When a transaction is not recorded at all or partially recorded in the books of original entry, both it's debit and credit aspects would be ommitted.

 In this type of error, an item of nominal account is entered into a real account or vice versa.

The transcation is not recorded, so the rectifying entry is the same as it is recorded in the books when the transaction occured.

 Such errors include entries of the transactions in a wrong account of the same class. It means the posting of an item is made to the correct side of a wrong account.

 The entry is not recorded in the books,  so we need to pass the original entry.

No record of purchase  means increase in the profit, so to adjust the profit  we need to open the profit and loss adjustment A/c and the party's a/c is not affected. So there is no need to record it through party's a/c.

 In this type of error, an item of nominal account is entered in a real account or vice versa. Here,  furniture is a real a/c and purchase is a nominal  a/c.

This is the error of principle because capital expense is treated as revenue expense. So the purchase A/c has to be credited and the furniture A/c has to be debited.

Here capital expense is treated as a revenue expense and this is because of wrong application of accounting princples.

This is the error of commission. It means the posting of an item is made to the correct side but of a wrong a/c i.e. here R & Co.'s a/c instead of S & Co.'s a/c.

This is the rectifying entry after the correction of wrong credit to R. & Co. for the amount received from S. & Co.

This is the rectifying entry because we need to debit the building account and buidling repairs A/c needs to be credited.

 This is a compensatory error because in the first transaction Rs. 300 have been debited more, whereas in the second transaction Rs. 300 have been debited less.

Depreciation account is an allowed expense. So it should be transferred to the Profit & Loss A/c

The overall impect on profit after rectification of both the errors is an increase of Rs. 5,000, so we need to credit the profit and loss adjustment account.

Trade Mark is an intengible asset and amortisation belongs to it.

The 12^th month's salary is not recorded in the books of original entry. Both it's debit and credit aspects have be omitted.

Credit purchase of an asset is recorded in the journal proper.

The expense is a revenue expense so we need to debit the account of expense and not the asset .

 This is a one-side error, so we need to open suspense account.

When any nominal account is affected because of any error, it will affect the profilt, so after prepration of profit and loss account,  we can adjust the profit,  with the profit and loss adjustment account.

Income received in advance is a current liability because you need to pay for this advance amount in the future.