Two Sided Errors

  • When a Trial Balancedoes not agree, efforts need to be made to locate the errors. Moreover, even when Trial Balance agrees, some errors may still remain in records. Such errors are called two sided errors.
  • Error of omission is an error when a transaction is completely or partially omitted from being recorded in the books of accounts.
  • Error of commission are errors, which are committed due to wrong posting of transaction, wrong totaling or balancing of the accounts or wrong casting of the subsidiary books or wrong recording of amount in the books of original entry, etc.
  • Error of principle occurs when a transaction is recorded in contravention of the accounting principle.
  • When two mistakes nullify the effect of each other and in spite of the errors in both the accounts, the Trial Balance still agrees. It is called compensating error.
  • Two sided errors are rectified by cancelling the effect of wrong debit or credit and restoring the effect of correct debit or credit.
  • Account showing an excess debit should be credited in the rectifying entry, account showing a short debit should be debited in the rectifying entry etc.
  • Alternative method for rectification of two sided errors is done by passing entry related to net effect of correct entry and reverse of wrong entry.
  • When errors are rectified after the preparation of final accounts, the nature of account should be identified.
  • If the error is in real account or personal account, the method of rectification is same as in case of pre-final account stages.
  • If the error is in nominal account, then Profit and Loss adjustment account or capital account should be used to rectify the errors.

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