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CMA Foundation · Fundamentals of Financial and Cost Accounting · Adjustment Entries and Rectification of Errors

Purchase of goods on credit from Sen & Co. for ₹4,200 was recorded in the Purchases Book as ₹2,400 and posted accordingly to both accounts. This is best described as:

This is an error of original entry. The wrong amount, ₹2,400 instead of ₹4,200, was written in the Purchases Book and then posted consistently to both accounts, so the trial balance agrees. The accounts used were correct, so it is not an error of principle.

  1. AError of principle
  2. BError of commission
  3. CError of original entryCorrect
  4. DCompensating error

Explanation

The wrong amount was written in the subsidiary book itself, the original record, and the wrong figure then flowed through to ledger accounts. Such an error, here a transposition of figures, is an error of original entry. Both debit and credit are affected equally, so the trial balance still agrees. It is not an error of principle because the accounts used are correct.

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