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CMA Foundation · Fundamentals of Financial and Cost Accounting · Accounting Cycle

Kapoor Enterprises paid Rs 7,500 as rent by cash. The amount was correctly debited to Rent Account but wrongly posted to the debit of the Cash Account instead of being credited. What is the effect on the totals of the ledger debit and credit sides (trial balance)?

The debit total exceeds the credit total by Rs 15,000. Cash should have been credited by Rs 7,500 but was debited, so credits are Rs 7,500 too low and debits Rs 7,500 too high. The combined difference is Rs 15,000 on the debit side.

  1. ADebit total exceeds credit total by Rs 7,500
  2. BCredit total exceeds debit total by Rs 15,000
  3. CDebit total exceeds credit total by Rs 15,000Correct
  4. DTotals are unaffected

Explanation

Correct posting needs a credit of Rs 7,500 to Cash. Instead a debit of Rs 7,500 was posted, so credits are short by 7,500 and debits are over by 7,500. The difference is 7,500 + 7,500 = Rs 15,000 excess on the debit side. Saying it is Rs 7,500 forgets the double effect.

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