A business acquired a new machine for cash. The bookkeeper correctly debited the Machine (Non-Current Asset) account but incorrectly credited the Purchases account instead of the Cash at Bank account. What is the effect of this error on the trial balance and the financial statements before correction?

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Accounting · Rectification of Errors

Verified Solution4 OptionsUpdated: October 2026👁️1 View

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The trial balance will balance; Purchases will be understated, and Profit will be overstated.

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Answer 1

The trial balance will not balance; Assets will be understated, and Profit will be overstated.

Answer 2

The trial balance will balance; Purchases will be understated, and Profit will be overstated.

Answer 3

The trial balance will balance; Purchases will be overstated, and Profit will be understated.

Answer 4

The trial balance will not balance; Purchases will be understated, and Assets will be overstated.

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