ACCA Applied Knowledge · Financial Accounting · Correction of errors
A business purchased office furniture for $4,000 and the bookkeeper debited the amount to the purchases account. Which journal correctly fixes this error?
Debit furniture cost $4,000 and credit purchases $4,000. The original debit sat in the wrong account, so it is moved to the correct non-current asset account. The trial balance still balances, as this is an error of principle.
- ADr Purchases $4,000; Cr Furniture cost $4,000
- BDr Furniture cost $4,000; Cr Purchases $4,000Correct
- CDr Furniture cost $4,000; Cr Payables $4,000
- DDr Purchases $8,000; Cr Furniture cost $8,000
Explanation
The furniture was wrongly debited to purchases, so the debit must be removed from purchases (credit) and placed in furniture cost (debit). This is an error of principle and does not affect the trial balance. Option A reverses the entry and doubles the error.
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