How are entries rectified after preparing the final balance?

There are two types of error rectifications while preparing the final balance. These are single side error and double side error respectively.

• Single side error

Nominal accounts are preplaced by P&L (Profit & Loss) adjustment accounts.

Example − Discount allowed of Rs.750 is not posted to a discount account.

After trial balance, the error rectification is as follows −

After final account, the error rectification is as follows −

• Double side error

Wrong entries are identified and rectification is made by making the appropriate entries.Nominal accounts are replaced by P&L adjustment accounts.

Suspense accounts, real and personal accounts will carry forward to next year.

Example − Purchase account is wrongly debited for Rs.15000 for purchase of a plant.

Correction

After trial balance, the error rectification is as follows −

After final balance, the error rectification is as follows −