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Q2. An accountant while balancing his books found that there was a difference of Rs 270 in the trial balance. Being required to prepare the final accounts he place the difference to a newly opened suspense account which was carried forward to the next year when the following errors were discovered: (a)?
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Q2. An accountant while balancing his books found that there was a dif...
Errors discovered in the next year:
There are some errors that were discovered in the next year which resulted in the difference of Rs 270 in the trial balance. These errors are:
- Purchases of Rs 5000 from M/s Gupta were recorded in the Purchases Book as Rs 500
- Sales of Rs 2000 to M/s Sharma were entered in the Sales Book as Rs 200
- A cheque received from M/s Ali for Rs 1500 was entered in the Cash Book as Rs 5100.
Impact of errors on accounts:
These errors had a significant impact on the final accounts. The incorrect recording of purchases and sales resulted in an understatement of these accounts. Similarly, the incorrect recording of the cheque received from M/s Ali resulted in an overstatement of the cash account.
Correction of errors:
To correct these errors, the following journal entries need to be passed:
- Purchases account debit with Rs 4500, and M/s Gupta account credit with Rs 4500 (Rs 5000 - Rs 500)
- M/s Sharma account debit with Rs 1800, and Sales account credit with Rs 1800 (Rs 2000 - Rs 200)
- Cash account debit with Rs 3600, and M/s Ali account credit with Rs 3600 (Rs 1500 + Rs 2100)
Impact of correction on accounts:
The correction of these errors will result in an accurate representation of the accounts. The correct recording of purchases and sales will result in an increase in the cost of goods sold and the revenue, respectively. The correction of the cash account will result in an accurate representation of the cash balance.
Adjustment in the suspense account:
After the correction of these errors, the suspense account balance of Rs 270 will need to be adjusted. To adjust this balance, the following journal entry needs to be passed:
- Suspense account debit with Rs 270, and Profit and Loss account credit with Rs 270
This will result in the elimination of the suspense account balance and the adjustment of the profit and loss account.
There are some errors that were discovered in the next year which resulted in the difference of Rs 270 in the trial balance. These errors are:
- Purchases of Rs 5000 from M/s Gupta were recorded in the Purchases Book as Rs 500
- Sales of Rs 2000 to M/s Sharma were entered in the Sales Book as Rs 200
- A cheque received from M/s Ali for Rs 1500 was entered in the Cash Book as Rs 5100.
Impact of errors on accounts:
These errors had a significant impact on the final accounts. The incorrect recording of purchases and sales resulted in an understatement of these accounts. Similarly, the incorrect recording of the cheque received from M/s Ali resulted in an overstatement of the cash account.
Correction of errors:
To correct these errors, the following journal entries need to be passed:
- Purchases account debit with Rs 4500, and M/s Gupta account credit with Rs 4500 (Rs 5000 - Rs 500)
- M/s Sharma account debit with Rs 1800, and Sales account credit with Rs 1800 (Rs 2000 - Rs 200)
- Cash account debit with Rs 3600, and M/s Ali account credit with Rs 3600 (Rs 1500 + Rs 2100)
Impact of correction on accounts:
The correction of these errors will result in an accurate representation of the accounts. The correct recording of purchases and sales will result in an increase in the cost of goods sold and the revenue, respectively. The correction of the cash account will result in an accurate representation of the cash balance.
Adjustment in the suspense account:
After the correction of these errors, the suspense account balance of Rs 270 will need to be adjusted. To adjust this balance, the following journal entry needs to be passed:
- Suspense account debit with Rs 270, and Profit and Loss account credit with Rs 270
This will result in the elimination of the suspense account balance and the adjustment of the profit and loss account.
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Q2. An accountant while balancing his books found that there was a dif...
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Q2. An accountant while balancing his books found that there was a difference of Rs 270 in the trial balance. Being required to prepare the final accounts he place the difference to a newly opened suspense account which was carried forward to the next year when the following errors were discovered: (a)?
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Q2. An accountant while balancing his books found that there was a difference of Rs 270 in the trial balance. Being required to prepare the final accounts he place the difference to a newly opened suspense account which was carried forward to the next year when the following errors were discovered: (a)? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Q2. An accountant while balancing his books found that there was a difference of Rs 270 in the trial balance. Being required to prepare the final accounts he place the difference to a newly opened suspense account which was carried forward to the next year when the following errors were discovered: (a)? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Q2. An accountant while balancing his books found that there was a difference of Rs 270 in the trial balance. Being required to prepare the final accounts he place the difference to a newly opened suspense account which was carried forward to the next year when the following errors were discovered: (a)?.
Q2. An accountant while balancing his books found that there was a difference of Rs 270 in the trial balance. Being required to prepare the final accounts he place the difference to a newly opened suspense account which was carried forward to the next year when the following errors were discovered: (a)? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Q2. An accountant while balancing his books found that there was a difference of Rs 270 in the trial balance. Being required to prepare the final accounts he place the difference to a newly opened suspense account which was carried forward to the next year when the following errors were discovered: (a)? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Q2. An accountant while balancing his books found that there was a difference of Rs 270 in the trial balance. Being required to prepare the final accounts he place the difference to a newly opened suspense account which was carried forward to the next year when the following errors were discovered: (a)?.
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