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CA Foundation · Accounting · Accounting Process

Gupta Traders' Purchases Book total for the month is Rs 1,20,000 but, while posting, the accountant debited Purchases Account with Rs 1,02,000 and credited the individual supplier accounts with the correct amounts totalling Rs 1,20,000. Which statement is correct?

The trial balance debit total will be Rs 18,000 less than the credit total, so it will not agree. Purchases was debited with only Rs 1,02,000 while suppliers were credited Rs 1,20,000, creating a one-sided posting error that the trial balance reveals.

  1. AThe trial balance debit total will be Rs 18,000 less than the credit total, so it will not agreeCorrect
  2. BThe trial balance will agree because this is an error of principle
  3. CThe trial balance debit total will be Rs 18,000 more than the credit total
  4. DThe trial balance will agree because the error is compensating

Explanation

Purchases is under-debited by Rs 18,000 (a transposition of digits 1,20,000 to 1,02,000), while suppliers are credited correctly by Rs 1,20,000. Total debits are therefore Rs 18,000 short of credits, so the trial balance will not agree. It is a one-sided error, not an error of principle or a compensating error.

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