In order to prepare for the interviews on rectification of errors, you have to be well prepared. For that, you should know about what rectification is and all similar facts connected to it. If you know every nook and corner of this topic, you can succeed in your interview. This knowledge will make you more confident, and you will get more time to concentrate on non-subject-related HR questions to pass all rounds of the interview.
Rectification Of Errors Questions For Interview
For now, let’s discuss some of the commonly asked questions on this topic.
1. What is rectification of errors?
Rectification of errors means correcting mistakes in accounting books to ensure that financial statements show the true profit or loss and financial position. Mistakes can happen while recording transactions, and rectifying them ensures accuracy.
2. Why is rectification of errors necessary?
It is necessary because:
- It ensures accurate profit or loss reporting.
- It shows the correct financial position of the business.
- Helps in audits and avoids misinterpretation by stakeholders.
3. At what stages can errors be rectified?
Errors can be rectified at three stages:
- Before preparing the trial balance (directly in the ledger).
- After preparing the trial balance, but before final accounts (using suspense account or journal entries).
- After final accounts are prepared (through profit and loss adjustment account or capital adjustment).
4. What are the objectives of rectification of errors?
- Correct financial records.
- Ensure trial balance accuracy.
- Avoid misrepresentation of profit or loss.
- Maintain trustworthiness of financial statements.
5. Can errors be rectified before preparing the trial balance?
Yes. If you find a mistake before preparing the trial balance, it can be corrected directly in the affected ledger accounts. No journal entry is needed in most cases.
6. Can you list at least 4 types of accounting errors?
- Errors of Omission: A transaction is wholly or partially not recorded
- Errors of Commission: Correct amount recorded in the wrong account or on the wrong side
- Errors of Principle: Accounting principles are not followed
- Compensating Errors: Two or more errors cancel each other’s effect
7. What is an error of omission? Give an example.
It happens when a transaction is completely or partially left out.
Example: You purchased office supplies worth ₹5,000 but forgot to record them in both the purchase and cash accounts.
8. What is an error of commission?
An error of commission occurs when a bookkeeper or accountant records a transaction for the correct amount but posts it to the incorrect account of the correct type (e.g., a wrong customer account, supplier account, expense account, or revenue account)
Example: You paid ₹10,000 to a creditor but credited the wrong supplier’s account.
9. What is an error of principle?
Error of principle occurs when accounting principles are violated.
Example: Treating the purchase of machinery (capital expenditure) as a revenue expense.
10. What are compensating errors?
Compensating errors are the errors that offset each other.
Example: Understanding sales expense by ₹1,000 and understating purchase expense by ₹1,000. The effects of the two errors offset each other, allowing the trial balance to balance.
11. Do compensating errors affect the trial balance?
No, because the debits and credits still balance, but the financial statements may be misleading due to underlying incorrect individual account balances.
12. How do errors of principle differ from errors of commission?
- Errors of principle: Application of an incorrect accounting principle.
- Errors of commission: Wrong posting or account, though the correct principle is followed.
13. Can you give some errors that are disclosed by a trial balance?
- One-sided entries
- Arithmetical mistakes in ledger balances
- Wrongly added totals
14. Can you list out the errors that are not disclosed by a trial balance?
- Complete omission
- Errors of principle
- Compensating errors
- Errors in original amounts if both debit and credit sides match
15. Can a trial balance agree even if errors exist?
Yes. For example, if you understate a sales account and an expense account by the same amount, the trial balance will still tally.
16. Why are errors of principle not detected by a trial balance?
Because debits and credits are made correctly, but the nature of the accounts is wrong. E.g., capital expenditure recorded as expense.
17. What are one-sided errors?
Errors that affect only one side (debit or credit) of an account cause a trial balance mismatch.
18. How are errors rectified before the trial balance?
By correcting the affected ledger accounts directly.
Example: Wrongly debited rent account ₹5,000 instead of office expenses → debit office expenses and credit rent.
19. Is a journal entry required before the trial balance?
Usually not. If you directly correct the wrong ledger posting, a journal entry may not be needed.
20. How do you rectify the wrong amount posted to the correct account?
Post the difference as a correcting entry.
Example: ₹10,000 was posted as ₹1,000. Post ₹9,000 to correct the account.
21. How are errors rectified after preparing the trial balance?
Through rectification, journal entries often use a suspense account to temporarily balance the trial balance until errors are corrected.
22. What is a suspense account?
A temporary account is used to record differences when the trial balance does not tally.
23. When is a suspense account opened?
When a trial balance difference is found, the source of the error is not yet identified.
24. Why is a suspense account used?
To temporarily hold the imbalance and prevent delays in preparing the trial balance or accounts.
25. How is a suspense account closed?
Once all errors are identified and rectified, the suspense account is cleared by passing correcting journal entries.
26. Can errors be rectified after final accounts are prepared?
Yes, through profit & loss adjustment account or capital account, especially if it affects previous periods’ profit.
27. How are errors rectified after final accounts?
- Debit/Credit the profit & loss adjustment account.
- Adjust the capital account if the previous period’s profit is affected.
28. How does rectification affect profit?
It can increase or decrease profit depending on whether income or expenses were under/overstated.
29. How is capital affected by past errors?
If profit/loss is adjusted due to an error, capital is increased or decreased accordingly.
30. How do you rectify sales recorded as purchases?
- Debit Sales Account
- Credit Purchases Account
31. How do you rectify an expense debited to an asset account?
- Debit correct Expense Account
- Credit Asset Account
32. How do you rectify cash paid but credited to the bank?
- Debit Bank Account
- Credit Cash Account
33. What is partial omission?
When a transaction is recorded in one account but not in the corresponding account.
Example: Payment recorded in cash but not credited to the creditor.
34. What is a complete omission?
When a transaction is completely missing from both debit and credit sides.
35. What is the Difference between rectification and adjustment entries?
- Rectification fixes errors
- Adjustment entries record accruals, depreciation, or prepayments.
36. Can rectification affect profit or loss?
Yes, especially if income or expense accounts are involved.
37. Why is the suspense account shown in the trial balance?
To temporarily balance unmatched debit or credit totals for reporting purposes.
38. What happens if the suspense account remains uncleared?
It indicates unresolved errors, making financial statements unreliable.
39. Can rectification change financial position?
Yes, because rectifying errors may increase/decrease assets, liabilities, income, or expenses.
40. How is rectification done in Tally?
Rectification is done in Tally by:
- Editing incorrect vouchers
- Passing correction entries
- Using suspense account if the trial balance differs
41. Is a suspense account used in computerized accounting?
Yes, it is used to hold unclassified/unmatched transactions or bank reconciliations. However, in modern accounting software, its use is less frequent because simple calculation errors are usually identified automatically.
42. How do audit trails help in rectification?
Audit trails track every entry and change made, making it easier to identify errors and correct them.
43. Name some precautions that can be taken to avoid the errors.
- Double-check entries
- Reconcile accounts regularly
- Maintain clear documentation
- Use accounting software for automation
44. How to explain rectification to a non-accountant?
To explain rectification to a non accountant, I can say that “It’s like fixing mistakes in your notebook so that the total adds up correctly and nothing is misleading.”
45. What are the steps to take when the trial balance does not tally?
- Recheck totals
- Check for one-sided entries
- Look for arithmetic mistakes
- Use a suspense account if needed
46. How to identify the nature of an error?
By analyzing:
- Which accounts are affected
- Which side (debit/credit) is wrong
- Whether it violates accounting principles
47. What is the role of rectification in audit?
This ensures accurate financial statements, compliance, and helps auditors verify transactions.
48. Can rectification entries be reversed?
Yes, if they were entered incorrectly or need adjustment.
49. What are the common mistakes during rectification?
- Choosing the wrong accounts
- Ignoring the suspense account balance
- Posting wrong amounts
50. Why is rectification important for decision-making?
Accurate records ensure managers, investors, and stakeholders make correct decisions based on true profit and financial position.
Final Thoughts
Now you have a lot of possible rectification of errors in interview questions, so make sure to revise them thoroughly before your interview to answer confidently and demonstrate your understanding. These questions often test your knowledge of various errors, how to detect and correct them. Being able to explain concepts like errors of omission, compensating errors, and many more will show that you can handle practical accounting challenges. Knowing how to answer these questions will present you as a responsible candidate who values accurate accounting, and by applying the concepts taught in different accounting courses, you will be better equipped to rectify certain errors with confidence and precision.
