Page 76 - Office Practice and Accounting 10

iv. Errors of duplication: An error of duplication occurs when the same transaction
has been recorded twice in the books of original entry and also posted twice in
the ledger. E.g. purchase worth Rs. 7000 may be recorded twice in the accounts.
v. Errors of principle: Errors of principle occurs due to the violation of fundamental
principles of accounting. This may be due to lack of correct knowledge of
the accounting principle on the part of the recording clerks. E.g. salary paid
recorded in wages, purchase of assets recorded in purchase book etc.

Adjustment and closing of trial balance or suspense account
When the trial balance does not agree and error still are undetected due to the limited
time, suspense account is opened to make the trial balance equal and account is closed.
Thus, suspence account is a temporary account opened to make the trial balance
equal. It is opened to rectify only those errors which affect the trial balance. Debit
balance of suspense account is taken to assets side and credit balance of suspense
account is taken to liability side of balance sheet. The amount appearing on the debit
or credit side of suspense account is result of one sided error. After locating such
errors suspense account should be closed.

Illustrations

1. The following ledger balances have been extracted from the books of
Pathivara Company as on 31st Chaitra 2072. Prepare trial balance.

Bank loan 2,50,000

Creditors 50,000
Cash in hand 40,000
Debtors 60,000
Share capital 3,00,000

Revenue 8,00,000
Fixed assets 7,00,000

Administrative expenses 2,00,000
Salaries 2,50,000
Selling expenses 1,50,000

70 Office Practice and Accounting 10