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Difference between reclass entries and rectification entries

Accounts / Finance


Pls. provide what is the difference between reclass entries and rectification entries.

Thanks in advance.

 
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Subject Matter Expert & CWA (Inter)

Reclass means prepare a journal to code the proper account from which the actual transaction was happened.Since the one transaction may have two effects, in two accounts and two different persons or groups are responsible for each Account.

Say a sum of Rs. 20,000 is transferred from A/c# 1000 to A/c# 2000. And assuming treasury take care for the transactions of A/c# 1000 and u for A/c# 2000. Obviously treasurey and ur group do not have the access to each other accounts (by default in ERP) and now u both cannot clear this transaction by debiting your account and crediting treasury a/c..so what treasury could have the instructions is to credit its account# 1000 and debit to an temporary account (for e.g a/c 5000)which u both groups can access. Now treasury debiting a/c# 5000 n crediting its account no.1000. n now when u find debit balance in a/c# 5000 u'll debit ur a/c#2000 to record the receipt n credit a/c 5000. This adjustment will knock off a/c 5000 to zero.

The above instance is called reclass.

Rectification means to make the correction for an entry which was incorrectly passed earlier.

 
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