In practical accounting, errors happen at many stages—recording in journal, posting to ledger, totaling, balancing, etc. To correct these errors, we do rectification by passing proper journal entries.
Even when books are correct, bank balance as per cash book and bank balance as per pass book (bank statement) can differ due to timing differences (cheques not yet cleared, charges, direct credits, etc.). For this we prepare a Bank Reconciliation Statement (BRS).
This topic is very scoring because exams often ask:
Error means a mistake in recording, classifying, posting or balancing accounting transactions.
Rectification means correction of errors by:
Trial balance checks only arithmetical accuracy, so it discloses only those errors that create disagreement.
Disclosed:
Not disclosed:
If error is found before trial balance, you can correct the original entry and posting directly (no suspense needed generally).
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Types of errors (any three) with examples:
Thus, errors may arise at recording, posting and classification stages.
Trial balance checks only arithmetical accuracy.
Table:
Hence, agreement of trial balance does not guarantee that accounts are error-free.
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In practical accounting, errors happen at many stages—recording in journal, posting to ledger, totaling, balancing, etc. To correct these errors, we do rectification by passing proper journal entries.
Even when books are correct, bank balance as per cash book and bank balance as per pass book (bank statement) can differ due to timing differences (cheques not yet cleared, charges, direct credits, etc.). For this we prepare a Bank Reconciliation Statement (BRS).
This topic is very scoring because exams often ask:
Error means a mistake in recording, classifying, posting or balancing accounting transactions.
Rectification means correction of errors by:
Trial balance checks only arithmetical accuracy, so it discloses only those errors that create disagreement.
Disclosed:
Not disclosed:
If error is found before trial balance, you can correct the original entry and posting directly (no suspense needed generally).
If trial balance is already prepared and error is discovered later:
Suspense Account is a temporary account used when trial balance does not agree and the difference is put in suspense to make trial balance tally temporarily.
Need:
Common patterns:
Typical examples:
BRS is a statement prepared to reconcile the difference between:
Objectives:
Major causes:
BRS can be prepared starting from:
Then adjust for timing differences to reach the other balance.
Format (typical):
When starting with Cash book balance:
Note: In exams, always read the question carefully (cash book balance given as favourable or overdraft) because add/less rules reverse for overdraft.
Error detected → Identify type → Check whether TB agrees → Pass rectification entry (use Suspense if needed)
Cash book balance ≠ Pass book balance → List timing differences → Add/Less as per rules → Get reconciled balance
If these notes helped you, a quick review supports the project and helps more students find it.
Common causes:
Table:
Conclusion: BRS is prepared to explain these timing and recording differences.