Trial Balance Test - 8

Since the transaction was completely omitted from the books, the normal journal entry for accrued interest will be passed.

X's account was to be debited by Rs.400 but was credited instead. His account will now be debited by Rs.800 (double amount) to rectify the error.

Since the transaction was completely omitted from the books, the normal journal entry for returns inward would be passed.

Machinery account was to be debited but it was recorded as purchases instead. Machinery account will now be debited and the purchases account will be credited to rectify the error.

It is an error of principle.

Omission of an item relating to an income will reduce the income and therefore reduce the profit.

Purchases is an expense. When an expense is not recorded, expenses get reduced and profit increases.

Suspense account balance is due to unidentified errors. It is transferred to the balance sheet so that the final accounts can be closed and errors can be rectified later when they are identified.

When goods are given as Charity,  it results in an outflow of the goods purchased. Purchases account is therefore credited to reduce the stock of the goods purchased for sale.

When an asset is purchased, the expenses incurred on that asset before putting it to use (like erection, installation, carriage, etc) are to be debited to that asset's account.