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On scrutiny, an accountant found that:
i. Bad debts recovery of Rs.500 was credited to debtors A/c wrongly
ii. Bank charges of Rs.50 was wrongly entered twice in Cash Book.
iii. Purchase returns of Rs.100 was omitted tobe entered in the book of A/c’s.
What is the impact on profit after rectification?
- a)Increase Rs.650
- b)Increase Rs.350
- c)Decrease Rs.650
- d)Decrease Rs.350
Correct answer is option 'A'. Can you explain this answer?
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On scrutiny, an accountant found that:i. Bad debts recovery of Rs.500 ...
Impact on Profit after Rectification
Errors in accounting can have a significant impact on the computation of profit. In this question, we are given three errors that need to be rectified, and we need to determine the impact on profit after rectification.
Rectification of Errors
i. Bad debts recovery of Rs.500 was credited to debtors A/c wrongly
This error means that the amount of Rs.500 was credited to the wrong account. To rectify this error, we need to debit the debtors account and credit the bad debts recovery account with Rs.500.
ii. Bank charges of Rs.50 was wrongly entered twice in Cash Book.
This error means that the bank charges of Rs.50 were entered twice in the cash book. To rectify this error, we need to deduct Rs.50 from the cash book balance.
iii. Purchase returns of Rs.100 was omitted to be entered in the book of A/cs.
This error means that the purchase returns of Rs.100 were not entered in the books of accounts. To rectify this error, we need to debit the purchases returns account and credit the purchases account with Rs.100.
Impact on Profit
After rectifying the above errors, the impact on profit can be calculated as follows:
- Bad debts recovery of Rs.500 was wrongly credited to debtors A/c. This means that the profit was understated by Rs.500. After rectification, profit will increase by Rs.500.
- Bank charges of Rs.50 were wrongly entered twice in Cash Book. This means that the cash book balance was overstated by Rs.50. After rectification, the cash book balance will decrease by Rs.50, and there will be no impact on profit.
- Purchase returns of Rs.100 was omitted to be entered in the book of A/cs. This means that the purchases were overstated by Rs.100. After rectification, profit will decrease by Rs.100.
Therefore, the total impact on profit after rectification will be an increase of Rs.500 - Rs.100 = Rs.400. However, the options given in the question do not match with this answer. The correct option should have been "Increase Rs.400".
Errors in accounting can have a significant impact on the computation of profit. In this question, we are given three errors that need to be rectified, and we need to determine the impact on profit after rectification.
Rectification of Errors
i. Bad debts recovery of Rs.500 was credited to debtors A/c wrongly
This error means that the amount of Rs.500 was credited to the wrong account. To rectify this error, we need to debit the debtors account and credit the bad debts recovery account with Rs.500.
ii. Bank charges of Rs.50 was wrongly entered twice in Cash Book.
This error means that the bank charges of Rs.50 were entered twice in the cash book. To rectify this error, we need to deduct Rs.50 from the cash book balance.
iii. Purchase returns of Rs.100 was omitted to be entered in the book of A/cs.
This error means that the purchase returns of Rs.100 were not entered in the books of accounts. To rectify this error, we need to debit the purchases returns account and credit the purchases account with Rs.100.
Impact on Profit
After rectifying the above errors, the impact on profit can be calculated as follows:
- Bad debts recovery of Rs.500 was wrongly credited to debtors A/c. This means that the profit was understated by Rs.500. After rectification, profit will increase by Rs.500.
- Bank charges of Rs.50 were wrongly entered twice in Cash Book. This means that the cash book balance was overstated by Rs.50. After rectification, the cash book balance will decrease by Rs.50, and there will be no impact on profit.
- Purchase returns of Rs.100 was omitted to be entered in the book of A/cs. This means that the purchases were overstated by Rs.100. After rectification, profit will decrease by Rs.100.
Therefore, the total impact on profit after rectification will be an increase of Rs.500 - Rs.100 = Rs.400. However, the options given in the question do not match with this answer. The correct option should have been "Increase Rs.400".
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On scrutiny, an accountant found that:i. Bad debts recovery of Rs.500 ...
Increase 650
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On scrutiny, an accountant found that:i. Bad debts recovery of Rs.500 was credited to debtors A/c wronglyii. Bank charges of Rs.50 was wrongly entered twice in Cash Book.iii. Purchase returns of Rs.100 was omitted tobe entered in the book of A/c’s.What is the impact on profit after rectification?a)Increase Rs.650b)Increase Rs.350c)Decrease Rs.650d)Decrease Rs.350Correct answer is option 'A'. Can you explain this answer?
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On scrutiny, an accountant found that:i. Bad debts recovery of Rs.500 was credited to debtors A/c wronglyii. Bank charges of Rs.50 was wrongly entered twice in Cash Book.iii. Purchase returns of Rs.100 was omitted tobe entered in the book of A/c’s.What is the impact on profit after rectification?a)Increase Rs.650b)Increase Rs.350c)Decrease Rs.650d)Decrease Rs.350Correct answer is option 'A'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about On scrutiny, an accountant found that:i. Bad debts recovery of Rs.500 was credited to debtors A/c wronglyii. Bank charges of Rs.50 was wrongly entered twice in Cash Book.iii. Purchase returns of Rs.100 was omitted tobe entered in the book of A/c’s.What is the impact on profit after rectification?a)Increase Rs.650b)Increase Rs.350c)Decrease Rs.650d)Decrease Rs.350Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for On scrutiny, an accountant found that:i. Bad debts recovery of Rs.500 was credited to debtors A/c wronglyii. Bank charges of Rs.50 was wrongly entered twice in Cash Book.iii. Purchase returns of Rs.100 was omitted tobe entered in the book of A/c’s.What is the impact on profit after rectification?a)Increase Rs.650b)Increase Rs.350c)Decrease Rs.650d)Decrease Rs.350Correct answer is option 'A'. Can you explain this answer?.
On scrutiny, an accountant found that:i. Bad debts recovery of Rs.500 was credited to debtors A/c wronglyii. Bank charges of Rs.50 was wrongly entered twice in Cash Book.iii. Purchase returns of Rs.100 was omitted tobe entered in the book of A/c’s.What is the impact on profit after rectification?a)Increase Rs.650b)Increase Rs.350c)Decrease Rs.650d)Decrease Rs.350Correct answer is option 'A'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about On scrutiny, an accountant found that:i. Bad debts recovery of Rs.500 was credited to debtors A/c wronglyii. Bank charges of Rs.50 was wrongly entered twice in Cash Book.iii. Purchase returns of Rs.100 was omitted tobe entered in the book of A/c’s.What is the impact on profit after rectification?a)Increase Rs.650b)Increase Rs.350c)Decrease Rs.650d)Decrease Rs.350Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for On scrutiny, an accountant found that:i. Bad debts recovery of Rs.500 was credited to debtors A/c wronglyii. Bank charges of Rs.50 was wrongly entered twice in Cash Book.iii. Purchase returns of Rs.100 was omitted tobe entered in the book of A/c’s.What is the impact on profit after rectification?a)Increase Rs.650b)Increase Rs.350c)Decrease Rs.650d)Decrease Rs.350Correct answer is option 'A'. Can you explain this answer?.
Solutions for On scrutiny, an accountant found that:i. Bad debts recovery of Rs.500 was credited to debtors A/c wronglyii. Bank charges of Rs.50 was wrongly entered twice in Cash Book.iii. Purchase returns of Rs.100 was omitted tobe entered in the book of A/c’s.What is the impact on profit after rectification?a)Increase Rs.650b)Increase Rs.350c)Decrease Rs.650d)Decrease Rs.350Correct answer is option 'A'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA Foundation.
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ample number of questions to practice On scrutiny, an accountant found that:i. Bad debts recovery of Rs.500 was credited to debtors A/c wronglyii. Bank charges of Rs.50 was wrongly entered twice in Cash Book.iii. Purchase returns of Rs.100 was omitted tobe entered in the book of A/c’s.What is the impact on profit after rectification?a)Increase Rs.650b)Increase Rs.350c)Decrease Rs.650d)Decrease Rs.350Correct answer is option 'A'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
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