Rectification in next financial year is done through :a)Profit andamp; Loss A/cb)Profit andamp; Loss Appropriation A/cc)Profit andamp; Loss Adjustment A/cd)None of theseCorrect answer is option 'C'. Can you explain this answer?

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Rectification in next financial year is done through :

a)
Profit & Loss A/c
b)
Profit & Loss Appropriation A/c
c)
Profit & Loss Adjustment A/c
d)
None of these

Correct answer is option 'C'. Can you explain this answer?

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Rectification in next financial year is done through :a)Profit & L...

C..

Since the Suspense Account is entered in the Trial Balance it has to be incorporated in the Final Accounts. ... Similarly, after the rectification of errors, the balance of the new Profit and Loss Adjustment Account are transferred to Capital Account.

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Rectification in next financial year is done through :a)Profit & L...

To address the rectification of errors that are detected in the subsequent financial year, it is essential to understand the role of various accounts in accounting practices.
Here’s a structured breakdown:

Understanding Error Rectification: Errors in accounting can occur due to various reasons, such as clerical mistakes, miscalculations, or incorrect entries. Ideally, these errors should be corrected in the same financial year they are identified to maintain the integrity of financial statements
When Errors are Detected in the Next Financial Year: If errors are discovered after the closure of the financial year, they cannot be adjusted directly in the previous year’s accounts. Instead, they must be addressed in the current financial year
Utilizing the Profit and Loss Adjustment Account: The Profit and Loss Adjustment Account is specifically designed for rectifying errors that have been carried over into the next financial year. This account allows for the adjustments to be reflected in the current year’s financial statements without altering the previous year’s records
Implications of Using the Profit and Loss Adjustment Account: By utilizing the Profit and Loss Adjustment Account, the organization can ensure that the financial statements present a true and fair view of its financial position. This method helps in accurately reflecting the profits or losses resulting from the rectified errors

Therefore, the correct choice for rectifying errors detected in the next financial year is the Profit and Loss Adjustment Account

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Rectification in next financial year is done through :a)Profit & Loss A/cb)Profit & Loss Appropriation A/cc)Profit & Loss Adjustment A/cd)None of theseCorrect answer is option 'C'. Can you explain this answer?

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