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ACCA Applied Knowledge · Financial Accounting · Correction of errors

A purchase of goods for $1,200 on credit from Tamsin Ltd was correctly entered in the purchases account but was debited to the account of Tamsin Ltd in the payables ledger, instead of credited. The payables ledger control account was posted correctly. Which statement is correct?

The list of payables ledger balances will differ from the control account by $2,400. The supplier's account was debited instead of credited, which reverses a $1,200 entry and creates a double-sized difference. The general ledger still balances and profit is unaffected.

  1. AThe trial balance will not balance because of a $2,400 difference
  2. BThe list of payables ledger balances will differ from the control account by $2,400Correct
  3. CProfit will be overstated by $1,200
  4. DThe trial balance will not balance because of a $1,200 difference

Explanation

The individual supplier account was debited instead of credited, so its balance is $2,400 lower than it should be. The control account is correct, so the list of balances differs from it by $2,400. The general ledger trial balance still balances because it uses the control account, and profit is unaffected.

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