RECTIFICATION OF ERRORS :

It is better to rectify errors always through journal entries. However, if an error is located immediately after it has been entered, the accountant may neatly cross out the wrong amount and initial the rectification. There should not be any overwriting. If however, some time has elapsed between the commission of the error and its detection, the error should be rectified by making suitable journal entries only.

Need for Rectification of Errors:
– To present the correct accounting information.
– To show the accurate profit or loss made during the year by preparing the profit & loss account.
– To disclose the true financial position by preparing the balance sheet.