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 corrects this error?
Debit office furniture $4,000 and credit purchases $4,000. The original entry put the debit in the wrong account, so the correction moves the debit from purchases to the asset account. No suspense entry is needed because the trial balance still balanced.
- ADr Purchases $4,000, Cr Office furniture $4,000
- BDr Office furniture $4,000, Cr Purchases $4,000Correct
- CDr Office furniture $4,000, Cr Suspense $4,000
- DDr Purchases $4,000, Cr Payables $4,000
Explanation
The furniture is a non-current asset but was debited to purchases. The correction removes the debit from purchases by crediting it and debits office furniture. Option A does the reverse and doubles the error. The trial balance still balances, so no suspense account is involved.
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