Trial Balance and Rectification of Errors Test - 7

Namita's account was to be debited but Sumita's account was debited instead. Namita's account will now be debited, Sumita's account will be credited and the balance  transferred to suspense account.

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.

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

Since the total of the purchase returns book was carried forward short,  the Purchase returns account will be credited with the difference to rectify the error.

It is an error of principle.

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

Since Rafique's account was wrongly credited by Rs.1400, it will now be debited by Rs.1400 only.

Suspense account can have debit or credit balance depending upon the type of errors which are left unidentified.

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.

Repairs to machinery during the time of its usage is a revenue expenditure and will be debited to repairs account.

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

Undercasting of the sales book implies that the sales recorded are less than the actual sales. The recorded value of the sales is therefore increased by crediting the sales account.

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

Suspense is an account which is opened when the trial balance does not agree due to the presence of one sided errors.

Namita's account was to be debited by Rs.6500 but was not. So it will now be debited by Rs.6500 to rectify the error.

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.

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.

When an asset is purchased (whether new or old), the expenses incurred on that asset before putting it to use are to be debited to that asset's account.

Purchase of office typewriter is a capital expenditure while general expenses are of revenue nature. Treating capital expenditure as revenue expenditure is an error of principle.

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

When a transaction is completely omitted from the books, it affects both the debit as well as the credit side equally. Therefore the trial balance is not affected.

When one sided errors are rectified, the accounts are debited and credited by unequal amounts. The entry is therfore completed by debiting or crediting the suspense account with the difference.

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

Rent is an expense and all expenses are to be debited to their particular heads only.

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.