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Unit-9 Errors And Their Rectification

Learn about the types of errors which are usually committed in the process of accounting, the procedure for locating and rectifying those errors.

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What do you mean by compensating errors?

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Learning Pundits Content Team

Written on Apr 16, 2019 4:30:13 PM

Compensating errors:

Those errors which nullify the effect of each other are called 'compensating errors'. In other words, compensating errors refer to such a group of errors wherein the effect of one error is compensated by the effect of other error or errors. For example, while posting an entry of Rs. 200 to the debit of Ram’s Account we wrongly wrote Rs. 400.

Then, while posting an entry of Rs. 500 to the debit of some other account we wrote Rs. 300. The first error led to a higher debit of Rs. 200 whereas the second error resulted in a lower debit of Rs. 200. Thus, the effect of the first error is nullified by the effect of the second error.