Accounting · Rectification of Errors
An accountant notices a discrepancy where a purchase of office equipment worth ₹50,000 was incorrectly recorded in the Purchases Account instead of the Office Equipment Account. Assuming the entity follows the double-entry system, which of the following statements correctly identifies the impact of this error?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The total of the trial balance will decrease by ₹50,000 as the entry was made in the wrong subsidiary book.
- 2This is an error of commission which will cause the trial balance to differ by ₹1,00,000.
- 3The trial balance will still agree, but the gross profit will be understated and the value of fixed assets will be understated.✓
- 4The trial balance will not agree because the debit side will be higher than the credit side by ₹50,000.
Correct answer
The trial balance will still agree, but the gross profit will be understated and the value of fixed assets will be understated.
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