Skip to content

CA Foundation · Accounting · Accounting Process

Goods returned by a customer, Kiran, worth Rs 4,000 were correctly entered in the Sales Returns Book but were posted to the debit side of Kiran's account instead of the credit side. What is the effect on the trial balance and the rectifying action needed?

The error is one-sided, so the trial balance will not agree. Kiran's account was debited Rs 4,000 instead of being credited, a Rs 8,000 swing. Rectify by debiting Suspense and crediting Kiran's account with Rs 8,000, which clears the difference.

  1. ATrial balance will not agree; Kiran's account should be credited with Rs 4,000 only
  2. BTrial balance will not agree; Kiran's account should be credited with Rs 8,000 through the Suspense AccountCorrect
  3. CTrial balance will agree; Kiran's account should be credited with Rs 8,000 and Suspense Account debited with Rs 8,000
  4. DTrial balance will agree; no rectification is required

Explanation

Kiran's account should have been credited Rs 4,000 but was debited Rs 4,000, so the debit side is overstated by Rs 8,000 relative to the correct position. The trial balance has debits higher by Rs 8,000, so a Suspense Account was credited. Rectification is: Suspense A/c Dr 8,000 to Kiran's A/c 8,000. Option 1 corrects only Rs 4,000 and leaves the error half-fixed.

Did you get it right without looking?

One question tells you little. A timed set on Accounting Process shows your real accuracy, how long you take and where you lose marks.

Practise Accounting ProcessFree diagnostic mock

More Accounting Process questions