Sometimes, when compiling accounting records, an error may be made in reflecting certain amounts. To correct it, a reversal method is used, which allows you to return the economic indicator to its original correct value. This method is also called the "red side" method.
Instructions
Step 1
Identify the error and determine its nature. If it is not associated with a change in data in accounting registers, then you can simply cross out the faulty amount and write the correct value over it. After that, the current date, the signature of the accountant and the inscription "Fixed" are put in front of the corresponding line. If the error has led to the need to change the accounting data, then the method of reversing the amounts is used.
Step 2
Use the reversal method to undo a previously made posting. The operation is performed manually and entered into the accounting register by means of red ink, therefore this method of error correction is also called "red storno".
Step 3
Compose next to the incorrect entry a similar one, but in red ink and using the opposite sign of the transaction amount. As a result, the error will be completely removed from accounting. The entry must be attributed to the last date of the reporting period, if the financial statements have not yet been approved. Otherwise, it is done for the period in which it was revealed.
Step 4
Swap debit and credit if the error was to reflect the wrong action. In this case, the "reverse wiring" method is used first. For example, materials were received from suppliers, and the accountant reflected the operation on the debit of account 60 and credit of account 10, which is incorrect. After that, it is necessary to enter the account 60 credit and account 10 debit twice in a row in order to get the correct value as a result. In this case, the second correct lead is entered in red ink.
Step 5
Use a combination of the "reverse posting" method and the reversal of the amount if the error lies in the incorrect reflection of the accounting object. In this case, the incorrect entry is reversed and transferred to the new object, after which the correct posting is made.
