Trial Balance and Rectification of Errors Class 11 Notes CBSE Accountancy Chapter 6 [Free PDF Download]

Definition: 

• A trial balance is a statement showing the balances, showing the debit and credit total of ledger accounts so as to provide arithmetic accuracy. 

• Trial balance provides proof of the accounting accuracy of recording the transactions but one cannot rely on Trial Balance wholly as sometimes it may not be accurate because of errors of complete omission or other errors that cannot be detected easily, but still the debit and credit sides being balanced.

• Trial balance is a necessary statement in accounting as it presents the final position of all accounts and assists in preparing the final statements.

Objectives of Preparing Trial Balance: 

The trial balance is drafted to achieve the following objectives : 

1. To help in achieving arithmetical accuracy of different ledgers accounts. 

2. To help in locating errors while recording transactions. 

3. To aid in preparation of the financial statements of the company. 

4. To evaluate and check the final debits is the same as the final credits.

Limitation of the Trial Balance:

Trial balance does not find and evaluate all types of errors, so it doesn’t ensure 100% accuracy. Some of the errors which we cannot find while preparing the Trial balance are:

i. When posting the same entries twice by mistake.

ii. When posting made in the wrong account but the amount is correct.

iii. When both accounts have the wrong amount posted.

iv. When a transaction is completely left out and not posted in Journals.

Preparation of Trial Balance: 

Trial Balances are generally prepared at the end of an accounting year but companies can prepare trial balance at the ends of the different periods to ascertain the accuracy of the accounts. 

Trial Balance of …….
as on 31st March, 2021 

Rectification of Errors: 

Errors are of two types: 

1. Errors that do not affect the Trial Balance 

2. Errors that affect the Trial Balance. 

Errors that Do Not Affect the Trial Balance: 

These are those errors that are being committed in two or more accounts so that it doesn’t affect the balances in Trial Balance. To rectify this a rectifying journal entry is passed. 

There are following types of errors that do not affect the Trial Balance: 

i. Error of Omission: When the transaction is omitted to be recorded in the books of account. For Example, Goods sold to Mohan were omitted to be recorded in the Sales Book. 

ii. Compensating Errors: When the net effects of two or more errors result in nil it is referred to as compensating errors. For example, if the purchase account has an excess debit of Rs. 5,000 and the Sales Return Account is undercast by the same amount. 

iii. Errors of Principle: If any accounting principle is violated while recording the transaction such errors do not affect the Trial balance. For example, An addition to machinery was wrongly debited to Repairs and Maintenance Account considering as revenue expenditure instead of capital expenditure. 

iv. Incorrect Account in the Original Book: Instead of Babu’s account, Shyam account is maintained.

v. Posting to the Wrong Account: Instead of posting in the purchase account, the transaction is posted in the sales account.

Errors that Affects the Trial Balance: 

These are those errors that are being committed in one account and they can be rectified by opening The Suspense Account. 

There are following errors that affects the Trial Balance: 

i. Error of Omission: When entry is not recorded in only one account giving rise to undercasting or overcasting of the account. For example, Credit Sales to Mohan was recorded in the Sales book but was not posted to Mohan’s Account. 

ii. Error of Commission: When an error is made while adding, subtracting, or totalling the ledger accounts it affects the Trial Balance and is called as Error of commission. 

iii. Wrong Posting: There may be a chance that there is a wrong posting of amount or posting the amount on the wrong side in the ledger account. Sometimes the amount posted in the ledger is correct but while posting to the trial balance itself it is posted wrong. In such situations these errors affect the Trial balance. 

Illustration: 1 

Trial Balance of ABC Ltd. doesn’t meet, It showed an excess credit Rs. 20,000. They put the difference to a suspense account. The errors that they located were: 

(i) Sales return book overcast by Rs. 2,000. 

(ii) Purchases book was undercast by Rs. 1200. 

(iii) In the sales book total of page no. 4 was carried forward to page 5 as Rs. 2,000 instead of Rs. 2,400 and total of page 8 was carried forward to page 9 as Rs. 11,200 instead of Rs. 10,000. 

(iv) Goods returned to Ram Rs. 2,000 were recorded through sales book. 

(v) Credit purchases from M & Co. Rs. 16,000 were recorded through sales books. 

(vi) Credit purchases from S & Co. Rs. 10,000 were recorded through sales books. However, S & Co. were correctly credited. 

(vii) Salary paid Rs. 4,000 was debited to employee’s personal account. 

Ans: Rectification entries:

(i) Sales return book overcast by Rs. 2,000. 

(ii) Purchases book was undercast by Rs. 1,200. 

(iii) In the sales book total of page no. 4 was carried forward to page 5 as Rs. 2,000 instead of Rs. 2,400 and total of page 8 was carried forward to page 9 as Rs. 11,200 instead of Rs. 10,000. 

(iv) Goods returned to Ram Rs. 2,000 were recorded through sales book. 

(v)  Credit purchases from M & Co. Rs. 16,000 were recorded through sales books. 

(vi) Credit purchases from S & Co. Rs. 10,000 were recorded through sales books. However, S & Co. were correctly credited. 

(vii) Salary paid Rs. 4,000 was debited to employee’s personal account. 

Suspense A/c 

CBSE Class 11 Accountancy Revision Notes Chapter 6 Trial Balance and Rectification of Errors

Trial Balance and Rectification of Errors – revising this chapter can be done from our revision notes. Students are always suggested to pay attention to their revision track as it is very beneficial in keeping them ever ready for the exam. Also, they are encouraged to follow our revision material for more clear and effectual revision.

Class 11 Accountancy Chapter 11 Revision Notes

The concept of Rectification of Errors is very simple, when an accountant makes any flaws and passes the wrong entry thereby recording the same in the books, after the detection of the wrongly recorded entries a rectifying entry is passed to nullify the effect this is what the basic meaning of ‘Rectification of Errors’. 

The role of Trial Balance in this chapter is that – Students need to check the wrong entry was passed before or after the Trial Balance and accordingly rectified entries are to be passed. Apart from the learning of all these details about this chapter, students need to maintain their regular schedule of revising to keep the chapter updated in the student’s cerebrum. 

In our revision notes we talked about – Definition, Preparation, Objectives of Preparing the Trial Balance, Format of Trial Balance, Rectification of Errors, Related Illustrations.

Key Takeaways of the Revision Notes and Few Suggestions for the Students

Students revising from these notes are equally ready for the exam and have a strong foothold over the chapter, the important topics revised here as follow :

1. Definition:

Students need to know the definition of trial balance. They should know the meaning before starting off with this chapter.

2. Preparation 

How and when to prepare the trial balance and the process related to its preparation is discussed in this section, which the students must not be ignorant about.

3. Format of Trial Balance 

Students should know the format of the Trial Balance. They are required to draft the same in the examination hence they should practice this.  

4. Rectification of Errors 

Rectifying the entry and passing the rectified entry, all need to be understood and practiced by the students.

5. Related Illustrations 

All the illustrations should be checked and analyzed by the students and the important ones need to be practiced.

Why these Revision Notes?

Students follow the revising strategy mandatorily to prepare for their exam, they should revise side by side of their new learning.

1. The revision material helps the students in revising the important chapter smoothly.

2. The students can revise in one single click rather than turning the pages of their book.

3. Even related illustrations are provided for the students that would facilitate easy and wholesome revision.

4. Students are not burdened to make extra revision notes, they can revise from the capsuled notes itself and save time in practicing the sums. 

NCERT Solutions Chapter 6 Class 11 Accountancy Revision Notes

Question: State the Meaning of a Trial Balance?

Answer: The debit and credit balances of all accounts in ledger is prepared in trial balance, to verify the arithmetical accuracy of the accounts. This is prepared after balancing all the accounts of ledger. The two columns in a Trial Balance: debit and credit. While the debit side includes all the debit balances, the credit side includes all the credit balances of the accounts. It also helps in preparing financial statements, as it is a summarised version of the ledger. It is generally prepared on a monthly or yearly basis.

This is an extract of the NCERT solutions, solutions in vivid form are provided for free in our portal itself.