CH 2

NAHTA PROFESSIONAL CLASSES M:8878819888 / 8518819888
CH - 1
ACCOUNTING PROCESS
DANGAL QUESTIONS
Basic Concept Questions ICAI RTP Questions ICAI Past Questions TOTAL Questions
2 15 10 27
BASIC CONCEPTS
1.1 |Page FACULTY:CA PRATIK NAHTA

BASIC TERMINLOGIES

BUSINESS OWNER

JOURNAL
TRADITIONAL APPROACH
Type of Accounts Rules of Debit Rules of Credit
For Personal Accounts
For Real Accounts
For Nominal Accounts
MODERN APPROACH
Type of Accounts INCREASE ( ) DECREASE( )
For Assets / Expenses /
Drawing Accounts
For Liabilities / Income /
Capital Accounts

LEDGERS
TRIAL BALANCE

SUBSIDIARY BOOKS

REVENUE EXP. Vs CAPITAL EXP.
REVENUE RECEIPT Vs CAPITAL RECEIPT

RECTIFICATION OF ERRORS
Q 1> The following errors were found in the book of Ram Prasad & Sons. Give the necessary entries to correct
them.
(1) Rs. 500 paid for furniture purchased has been charged to ordinary Purchases Account.
(2) Repairs made were debited to Building Account for Rs. 50.
(3) An amount of Rs.100 withdrawn by the proprietor for his personal use has been debited to Trade
Expenses Account.
(4) Rs.100 paid for rent debited to Landlord’s Account.
(5) Salary Rs.125 paid to a clerk due to him has been debited to his personal account.
(6) Rs.100 received from Shah & Co. has been wrongly entered as from Shaw & Co.
(7) Rs. 700 paid in cash for a typewriter was charged to Office Expenses Account.


CORRECTION IN THE NEXT ACCOUNTING PERIOD
Q 2> Mr. Roy was unable to agree the Trial Balance last year and wrote off the difference to the Profit and
Loss Account of that year. Next Year, he appointed a Chartered Accountant who examined the old
books and found the following mistakes:
(1) Purchase of a scooter was debited to conveyance account Rs.3,000.
(2) Purchase account was over-cast by Rs.10,000.
(3) A credit purchase of goods from Mr. P for Rs.2,000 entered as a sale.
(4) Receipt of cash from Mr. A was posted to the account of Mr. B Rs.1,000.
(5) Receipt of cash from Mr. C was posted to the debit of his account, Rs.500.
(6) Rs. 500 due by Mr. Q was omitted to be taken to the trial balance.
(7) Sale of goods to Mr. R for Rs.2,000 was omitted to be recorded.
(8) Amount of Rs.2,395 ofpurchase was wrongly posted as Rs.2,593.
Mr. Roy used 10% depreciation on vehicles. Suggest the necessary rectification entries


PROVISION Vs CONTINGENT LIABILITIES
CONTINGENT ASSETS

POINTS TO BE REMEMBERED

Lets DANGAL with ICAI RTP QUESTIONS

MAY 2018
Q1> Prepare Journal Entries for the following transactions in the books of Gamma Bros.
(i) Employees had taken stock worth Rs. 10,000 (Cost price Rs. 7,500) on the eve of Deepawali and the same
was deducted from their salaries in the subsequent month.
(ii) Wages paid for erection of Machinery Rs. 8,000.
(iii) Income tax liability of proprietor Rs. 1,700 was paid out of petty cash.
(iv) Purchase of goods from Naveen of the list price of Rs. 2,000. He allowed 10% trade discount, Rs. 50 cash
discount was also allowed for quick payment.
ANS. Journal Entries in the books of Gamma Bros.

Q2> Classify the following expenditures as capital or revenue expenditure:
(i) Amount spent on making a few more exists in a Cinema Hall to comply with Government orders.
(ii) Travelling expenses of the directors for trips abroad for purchase of capital assets.
(iii) Amount spent to reduce working expenses.
(iv) Amount paid for removal of stock to a new site.
(v) Cost of repairs on second-hand car purchased to bring it into working condition.
ANS. (i) Revenue Expenditure.

(ii) Capital Expenditure.
(iii) Revenue Expenditure.
(iv) Revenue Expenditure.
(v) Capital Expenditure.
Q3> Prepare a Triple Column Cash Book from the following transactions and bring down the balance for the start of
next month
2017 Nov. Rs.
1 Cash in hand 3,000
1 Cash at bank 12,000
2 Paid into bank 1,000
5 Bought furniture and issued cheque 1,500
8 Purchased goods for cash 500
12 Received cash from Mohan 980
Discount allowed to him 20
14 Cash sales 5,000
16 Paid to Amar by cheque 1,450
Discount received 50
19 Paid into Bank 500
23 Withdrawn from Bank for Private expenses 600
24 Received cheque from Parul 1,430
Allowed him discount 20
26 Deposited Parul’s cheque into Bank
28 Withdrew cash from Bank for Office use 2,000
30 Paid rent by cheque 800

ANS. (a) Triple Column Cash Book
Note: (1) Discount allowed and discount received Rs. 40 and Rs. 50 respectively should be posted in respective Accounts
in the ledger.
(2) When cheque is not promptly deposited into Bank, first it is entered in the Cash Column and subsequently at
the time of deposit, Bank Account is debited and Cash Account is credited.
Q4> The following errors were committed by the Accountant of Geete Dye-Chem.
(i) Credit sale of Rs. 400 to Trivedi & Co. was posted to the credit of their account.
(ii) Purchase of Rs. 420 from Mantri & Co. passed through Sales Day Book as Rs. 240
How would you rectify the errors assuming that :
(a) they were detected before preparation of Trial Balance.
(b) they were detected after preparation of Trial Balance but before preparing Final Accounts, the difference was
taken to Suspense A/c.
(c) they were detected after preparing Final Accounts.

ANS. (i) This is one sided error. Trivedi & Co. account is credited instead of debit. Amount posted to the wrong
side and therefore while rectifying the account, double the amount (Rs. 800) will be taken.
(ii) Purchase of Rs. 420 is wrongly recorded through sales day book as Rs. 240.
Rectification Entry
NOV 2018
Q5> Pass a journal entry in each of the following cases.
(i) A running business was purchased by Mohan with following assets and liabilities:
Cash Rs. 2,000, Land Rs. 4,000, Furniture Rs. 1,000, Stock Rs. 2,000, Creditors Rs. 1,000, Bank Overdraft Rs. 2,000.
(ii) Goods distributed by way of free samples, Rs. 1,000.
(iii) Rahim became an insolvent and could pay only 50 paise in a rupee. Amount due from him Rs. 600.

ANS.
Q6> Classify each of the following transactions into capital or revenue transactions:
-- Complete repaint of existing building.
-- Installation of a new central heating system.
-- Repainting of a delivery van.
-- Providing drainage for a new piece of water-extraction equipment.
-- Legal fees on the acquisition of land.
-- Carriage costs on a replacement part for a piece of machinery.
ANS. -- Complete repaint: revenue.

-- Installation of new heating system: capital.
-- Repainting van: revenue.
-- Drainage for new equipment: capital.
-- Legal fees on acquisition of land: capital
-- Carriage costs on replacement part: revenue.

Q7> Prepare a Triple Column Cash Book for the month of April 2018 from the following transactions and bring down
the balance for the start of next month:
ANS. Triple Column Cash Book

Note: (1) Discount allowed and discount received Rs. 60 and Rs. 75 respectively should be posted in respective Accounts
in the ledger.
(2) When cheque is not promptly deposited into Bank, first it is entered in the Cash Column and subsequently at
the time of deposit, Bank Account is debited and Cash Account is credited.
Q8> Classify the following errors under the three categories – Errors of Omission, Errors of Commission and
Errors of Principle.
(i) Sale of furniture credited to Sales Account.
(ii) Purchase worth Rs. 4,500 from M not recorded in subsidiary books.
(iii) Credit sale wrongly passed through the Purchase Book.
(iv) Machinery sold on credit to Mohan recorded in Journal Proper but omitted to be posted.
(v) Goods worth Rs. 5,000 purchased on credit from Ram recorded in the Purchase Book as Rs. 500.
ANS. (i) Error of Principle.

(ii) Error of Omission.
(iii) Error of Commission.
(iv) Error of Omission.
(v) Error of Commission
MAY 2019
Q9> M/s Suman & Co. find the following errors in their books of account before preparation of Trial Balance. You are
required to pass necessary journal entries:
(i) A purchase of Rs. 5,600 from M/s Minu & Co. was recorded in the accounts of M/s Mintu & Co. as Rs. 6,500.
Day Book entry has also been passed incorrectly.
(ii) A sale of Rs. 9,800 to M/s Bantu Bros. was recorded in M/s Bindu & Co.’s account as Rs. 8,900. Day Book

entry has also been incorrectly passed.
(iii) Discount allowed Rs. 560 (as per Cash Book) has been posted to Commission Account. But the Cash Book
total should be Rs. 650, because discount allowed of of Rs. 90 to M/s Bantu Bros. has been omitted.
(iv)A cheque of Rs. 9,700 drawn by M/s Bantu Bros. has been dishonoured, but wrongly debited to M/s Bhakt &
Co. Should the Trial Balance tally without rectification of errors?
ANS. Journal Proper of Suman & Co.

Rectification Entries
Since all the errors are two-sided in nature, Trial Balance would have tallied even if the rectifications are not
done.

Q10> Classify the following expenditures and receipts as capital or revenue:
(i) Rs. 10,000 spent as import duty on machinery purchased.
(ii) Amount received from debtors during the year.
(iii) Cost of testing whether the equipment is functioning properly.
(iv) Insurance claim received on account of a machinery damaged by fire.
Ans. (i) Capital expenditure

(ii) Revenue receipt.
(iii) Capital expenditure.
(iv) Capital receipt.
Q11> From the following transactions, prepare the Purchases Returns Book of Alpha & Co., a saree dealer and post
them to ledger :
ANS. Purchase Returns Book

Q12> Write out the Journal Entries to rectify the following errors, using a Suspense Account.
(1) Goods of the value of Rs.10,000 returned by Mr. Sharma were entered in the Sales Day Book and posted
therefrom to the credit of his account;
(2) An amount of Rs.15,000 entered in the Sales Returns Book, has been posted to the debit of Mr. Philip, who
returned the goods;
(3) A sale of Rs.20,000 made to Mr. Ghanshyam was correctly entered in the Sales Day Book but wrongly posted
to the debit of Mr. Radheshyam as Rs.2,000;
(4) Bad Debts aggregating Rs.45,000 were written off during the year in the Sales ledger but were not adjusted
in the General Ledger; and
(5) The total of “Discount Allowed” column in the Cash Book for the month of September, 2018 amounting to
Rs.25,000 was not posted.
ANS. JOURNAL

NOV 2019
Q13>1. Prepare a Petty Cash Book on the Imprest System from the following:

Ans: PETTY CASH BOOK
MAY 2020
Q14> Classify the following expenditures as capital or revenue expenditure:
(i) Money spent to reduce working expenses.
(ii) Amount spent as lawyer’s fee to defend a suit claiming that the firm’s factory site belonged to the
plaintiff’s land.
(iii) Rings and Pistons of an engine were changed at a cost of Rs. 5,000 to get fuel efficiency.
(iv) Compensation of Rs. 2.5 crores paid to workers, who opted for voluntary retirement.

Ans (i) Capital expenditure. (ii) Revenue expenditure.
(iii) Capital expenditure. (iv) Revenue expenditure.
Q15> The following mistakes were located in the books of a concern after its books were closed and a Suspense
Account was opened in order to get the Trial Balance agreed: (ICAI NOV 2018 Exams Question Also)
(i) Sales Day Book was overcast by Rs. 1,000.
(ii) A sale of Rs. 5,000 to X was wrongly debited to the Account of Y.
(iii) General expenses Rs. 180 was posted in the General Ledger as Rs. 810.
(iv) A Bill Receivable for Rs. 1,550 was passed through Bills Payable Book. The Bill was given by P.
(v) Legal Expenses Rs. 1,190 paid to Mrs. Neetu was debited to her personal account.
(vi) Cash received from Ram was debited to Shyam Rs. 1,500.
(vii) While carrying forward the total of one page of the Purchases Book to the next, the amount of Rs. 1,235
was written as Rs. 1,325.
Find out the amount of the Suspense Account and Pass entries (including narration) for the rectification of the
above errors in the subsequent year’s books.
Ans Rectification entries

Suspense A/c

Let’s DANGAL with ICAI PAST EXAMS QUESTIONS

Q1. A book-keeper, while preparing his trial balance finds that the debit exceeds by Rs. 7,250. Being
required to prepare the final accounts, he places the difference to a Suspense Account. In the next year,
the following mistakes were discovered:
(a) A sale of Rs. 4,000 has been passed through the Purchase Day-book. The entry in customer’s
account has been correctly recorded.
(b) Goods worth Rs. 2,500 taken away by the proprietor for his use has been debited to Repairs Acc.
(c) A Bill receivable for Rs. 1,300 received from Krishna has been dishonoured on maturity, but no entry
passed.
(d) Salary Rs. 650 paid to a clerk has been debited to his Personal Account.
(e) A Purchase of Rs. 750 from Raghubir has been debited to his account. Purchases Account has
been correctly debited.
(f) A sum of Rs. 2,250 written off as depreciation on furniture has not been debited to Depreciation
Account.
Draft the Journal entries for rectifying the above mistakes and prepare Suspense Account.
Sol JOURNAL
Date Particulars Dr.(Rs.) Cr.(Rs.)
(a) Suspense A/c Dr. 8,000
To P & L Adjustment a/c 8,000
(Entry for rectifying a credit sale entered in purchase book)
(b) Drawing A/c Dr. 2,500
To P & L Adjustment A/c 2,500
(Goods drawn for personal use wrongly debited to repairs, now rectified)
(c) Krishna's A/c Dr. 1,300

To Bills Receivable A/c 1,300

(Being entry for bill dishonoured on maturity)
(d) P & L Adjustment A/c Dr. 650
To Clerk’s A/c 650
(Being salary wrongly debited to Clerk’s A/c, now rectified)
(e) Suspense A/c Dr. 1,500
To Raghubir’s A/c 1,500
(Being wrong debit to Raghubir’s A/c, now rectified)
(f) P & L Adjustment A/c Dr. 2,250
To Suspense A/c 2,250
(Being depreciation on furniture not posted to Depreciation A/c, now
rectified)
DR. SUSPENSE ACCOUNT CR.

Particulars Rs. Particulars Rs.
To P & L Adjustment A/c 8,000 By Balance b/d 7,250
To Raghubir's A/c 1,500 By P & L Adjustment A/c 2,250
9,500 9,500
Q2> On 31st March, 2018, a book-keeper finds the difference in the Trial Balance and he puts it in the
Suspense Account. Later on he detects the following errors:
(i) Rs. 50,000 received from A was posted to the debit of his Account.
(ii) Rs. 20,000 being purchases returns were posted to the debit of Purchases Account.
(iii) Discount of Rs. 8,000 received were posted to the debit of Discount Account.
(iv) Rs. 9,060 paid for repairs of Motor Car was debited to Motor Car Account as Rs. 7,060.
(v) Rs. 40,000 paid to B was debited to A’s Account.
Required: Give Journal Entries to rectify the above errors and ascertain the amount transferred to
Suspense Account on 31st March, 2018 by showing the Suspense Account, assuming that the

Suspense Account is balanced after the above corrections
Sol. JOURNAL
Date Particulars Dr. (Rs.) Cr. (Rs.)
(i) Suspense A/c Dr. 1,00,000
To A's A/c 1,00,000
(Being the rectification of error by which Amount received from A was
wrongly debited to his account)
(ii) Suspense A/c Dr. 40,000
To Purchase A/c 20,000
To Purchases Returns A/c 20,000
(Being the rectification of error by which purchases returns had been
wrongly posted to the purchases account)
(iii) Suspense A/c Dr. 16,000
To Discount A/c 16,000
(Being the rectification of error by which discount received wrongly was
debited to discount account)
(iv) Motor Car Repairs A/c Dr. 9,060
To Motor Car A/c 7,060
(Being the rectification of error by which motor car repair expenses Rs.
9,060 wrongly debited to motor car account as Rs. 7,060)
(v) B's A/c Dr. 40,000
To A’s A/c 40,000
(Being the rectification of error by which amount paid to B had been
wrongly debited to A)

To A’s A/c 1,00,000 By Difference in trial balance 1,54,000
To Purchases A/c 20,000 (balancing figure)
To Purchases Returns A/c 20,000 By Motor Car Repairs A/c 2,000

1,56,000 1,56,000
Q3> There was an error in the Trial Balance of Mr. Steel on 31st March, 2018, and the difference in Books
was carried to a Suspense Account. On going through the Books you find that:
(i) Rs. 5,400 received from Mr. A was posted to the debit of his account.
(ii) Rs. 1,000 being purchases return were posted to the debit of purchases Account.
(iii) Discount received Rs. 2,000 was posted to the debit of Discount Account.
(iv) Rs. 2,740 paid for Repairs to Motor Car was debited to Motor Car Account as Rs. 1,740.
(v) Rs. 4,000 paid to B was debited to A’s Account.
Required: Give Journal Entries to rectify the above error and ascertain the amount transferred to
Suspense Account on 31st March, 2018 by showing the Suspense Account, assuming that the
Suspense Account is balanced after the above corrections.
State which types of errors are not disclosed by the agreement of the Trial Balance.
Sol. JOURNAL
Date Particulars Dr.(Rs.) Cr.(Rs.)

(i) Suspense A/c Dr. 10,800
To A’s A/c 10,800
(Being the cash received from A debited to his account, now rectified)
2) Suspense A/c Dr. 2,000
To Purchases A/c 1,000
(Being the purchase returns posted to Purchases, rectified)
3) Suspense A/c Dr. 4,000
(Being discount received treated as discount allowed, now rectified)

4) Repairs to Motor car A/c Dr. 2,740

To Motor car A/c 1,740
(Being repairs to car, treated as capital expense now rectified)
5) B's A/c Dr. 4,000
To A's A/c 4,000
(Being Money received from B debited to A’s A/c, rectified)

To As A/c 10,800 By Balance b/d (b.f) 15,800
To Purchases A/c 1,000 By Repairs to Motor Car A/c 1,000
16,800 16,800
The various errors not affecting Trial Balance are—
1. Errors of principle
2. Compensating errors
3. Errors of complete omission
4. Error of recording in books of original entry.
5. Positing a correct amount on correct side of a wrong account.
Q4> The Trial Balance of ABC Ltd. as on March 31, 2018 did not agree. The difference was put to a
Suspense Account. During the next trading period, the following errors were discovered:
(i) The total of the Sales-book of one page Rs. 6,531 was carried forward to next page as Rs. 6,351
(ii) Goods returned by a customer for Rs. 1,200, but entered in Purchases Return Book.
(iii) Personal Car Expenses amounting to Rs. 250 were debited to Trade Expenses.
(iv) Sales Return Book was undercast by Rs. 2,750.
(v) Rs. 50 discount allowed by a supplier, was wrongly posted to debit side of Discount Account.

(vi) An item of purchases of Rs. 151 was entered in Purchases Book as Rs. 15 and posted to
Supplier’s account as Rs. 51.
Required: Pass Journal Entries to rectify the errors through Profit & Loss Adjustment A/c in a way
so as to show the Current year’s profit or loss correctly.
Sol. JOURNAL OF ABC LTD

(i) Suspense A/c Dr. 180
To Profit & Loss Adjustment A/c 180
(Being total of sales book of one page Rs. 6,531 carried forward wrongly as
Rs. 6,351, now rectified)
(ii) Profit and Loss Adjustment A/c Dr. 2,400
To Customer’s A/c 2,400
(Being goods returned by a customer, wrongly entered in Purchase Return
Book last year, now rectified)
(iii) Drawings A/c Dr. 250
To Profit and Loss Adjustment A/c 250
(Being personal car expenses wrongly debited to trade expenses last year,
now rectified)
(iv) Profit and Loss Adjustment A/c Dr. 2,750
(Being sales return book under cast last year, now rectified)
(iv) Suspense A/c Dr. 100
To Profit and Loss Adjustment A/c 100
(Being discount received Rs. 50 wrongly debited to discount account, now
rectified)
(vi) Profit and Loss Adjustment A/c Dr. 136
To Supplier's A/c 100
To Suspense A/c 36
(Being purchases A/c short debited by Rs. 136 and supplier A/c short credited
by Rs. 100, now rectified)

Q5> The difference in Trial Balance is kept by Rajesh in Suspense account. Before preparing the Final
Accounts, the following errors were detected by him:
(i) Purchase for Rs. 1,080 was written in Sales day book, but was posted to the correct side of the
Party’s account.
(ii) Salary account total Rs. 25,200 was carried over to the next page as Rs. 2,520 on the wrong side.
(iii) Interest on Overdraft Rs. 1,300 was not posted to the Ledger from the Cash-book.
Pass the Rectification entries and prepare the suspense account.
Sol. JOURNAL

Sales A/c Dr. 1,080
Purchases A/c Dr. 1,030
(Being Purchase wrongly recorded, now rectified)
Salary A/c Dr. 27,720
(Being Salary A/c total wrongly carried over, now rectified)
Interest & Overdrafts A/c Dr. 1,300
(Being interest on O/D omitted to be posted, now rectified)

To Difference in Trial Balance 31,180 By Sales A/c 1.080
By Purchase A/c 1,080
By Salary A/c 27,720
By Interest on Overdraft 1,300
31,180 31,180

Q6> Give journal entries (narrations not required) to rectify the following: (May 2018)
(i) Purchase of Furniture on credit from Nigam for Rs.3,000 posted to Subham account as Rs.300.
(ii) A Sales Return of Rs.5,000 to Jyothy was not entered in the financial accounts though it was
duly taken in the stock book.
(iii) Investments were sold for Rs.75,000 at a profit of Rs.15,000 and passed through Sales account.
(iv) An amount of Rs.10,000 withdrawn by the proprietor (Darshan) for his personal use has been
debited to Trade Expenses account.
Sol.
Note : It has been assumed that in the first point, Furniture A/c also have not been posted.
Q7> Miss Daisy was unable to agree the Trial Balance last year and wrote off the difference to the profit
and loss account of that year. On verifying the old books by a Chartered Accountant next year, the
following mistakes were found. (May 2018)
(i) Purchase account was undercast by Rs.8,000.
(ii) Sale of goods to Mr. Rahim for Rs.2,500 was omitted to be recorded.
(iii) Receipt of cash from Mr. Asok was posted to the account of Mr. AnbuRs.1,200.
(iv) Amount of Rs.4,167 of sales was wrongly posted as Rs.4,617.

(v) Repairs to Machinery was debited to Machinery Account Rs.1,800.
(vi) A credit purchase of goods from Mr. Paul for Rs.3,000 entered as sale.
Suggest the necessary rectification entries.
Sol. Journal Entries in the books of Miss Daisy

*Considering that the difference was posted to Suspense account.
2. Suspense Account
Q8> Give journal entries (with narrations) to rectify the following errors located in the books of a Trader
after preparing the Trial Balance: (May 2019)
(i) An amount of Rs 4,500 received on account of Interest was credited to Commission account.
(ii) A sale of Rs 2,760 was posted from Sales Book to the Debit of M/s Sobhag Traders at Rs 2,670
(iii) Rs 35,000 paid for purchase of Air conditioner for the personal use of proprietor debited to
Machinery A/c.
(iv) Goods returned by customer for Rs 5,000. The same have been taken into stock but no entry
passed in the books of accounts.
SOL. Journal Entries

Q9> Correct the following errors (i) without opening a Suspense Account and (ii) with opening a Suspense
Account:
(1) The sales book has been totalled Rs 2,100 short.
(2) Goods worth Rs 1,800 returned by Gaurav & Co. have not been recorded anywhere.
(3) Goods purchased Rs 2,250 have been posted to the debit of the supplier Sen Brothers.
(4) Furniture purchased from Mary Associates, Rs 15,000 has been entered in the purchase Daybook.
(5) Discount received from Black and White Rs 1,200 has not been entered in the books.
(6) Discount allowed to Radhe Mohan & Co. Rs 180 has not been entered in the Discount Column of
the Cashbook. The account of Radhe Mohan & Co. has, however, been correctly posted.
SOL: (i) If a Suspense Account is not opened.
(a) Since sales book has been cast Rs 2,100 short, the Sales Account has been similarly credited
Rs2,100 short. The correcting entry is as follows:
Sales A/c

(b) To rectify the omission, the Returns Inwards Account has to be debited and the account of Gaurav
&Co. credited. The entry is:
Returns Inward Account Dr. Rs1,800

To Gaurav & Co. Rs1,800
(Goods returned by the firm, previously omitted from the Returns Inward Book)
(c) Sen Brothers have been debited Rs2,250 instead of being credited. This account should now be
credited by Rs4,500 to remove the wrong debit and to give the correct credit. The entry will be done as
follows:
Sen Brothers A/c
(d) By this error Purchases Account has to be debited by Rs15,000 whereas the debit should have been
to the Furniture Account. The correcting entry will be:
Furniture Account Dr. Rs15,000

To Purchases Account Rs15,000
(Correction of the mistake by which purchases Account was debited instead of the Furniture Account)
(e) The discount of Rs1,200 received from Black & White should have been entered on the credit side
of the cash book. Had this been done, the Discount Account would have been credited (through the
total of the discount column) and Black & White would have been debited. This entry should be made :
Black & White Dr. Rs1,200

To Discount Account Rs1,200
(Rectification of the error by which the discount allowed by the firm was not entered in Cash Book)
(f) In this case the account of the customer has been correctly posted; the Discount Account has been
debited Rs180 short since it has been omitted from the discount column on the debit side of the cash
book. The discount account should now be rectified as follows:

Discount A/c
(ii) If a Suspense Account is opened:

Q10> An inexperienced book keeper has drawn up a Trial balance for the year ended 31st March, 2019
Draw up a corrected Trial Balance by debiting or crediting any residual errors to a suspense account.
(Nov 2019)

SOL.: Trial Balance as on 31st March, 2019
considered as opening inventory.

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NAHTA PROFESSIONAL CLASSES M:8878819888 / 8518819888

1.1 |Page FACULTY:CA PRATIK NAHTA

1.2 |Page FACULTY:CA PRATIK NAHTA

1.3 |Page FACULTY:CA PRATIK NAHTA

1.4 |Page FACULTY:CA PRATIK NAHTA

1.5 |Page FACULTY:CA PRATIK NAHTA

1.6 |Page FACULTY:CA PRATIK NAHTA

REVENUE EXP. Vs CAPITAL EXP.

REVENUE RECEIPT Vs CAPITAL RECEIPT

1.7 |Page FACULTY:CA PRATIK NAHTA

(4) Rs.100 paid for rent debited to Landlord’s Account.

1.8 |Page FACULTY:CA PRATIK NAHTA

1.9 |Page FACULTY:CA PRATIK NAHTA

CORRECTION IN THE NEXT ACCOUNTING PERIOD

books and found the following mistakes:

(1) Purchase of a scooter was debited to conveyance account Rs.3,000.

(2) Purchase account was over-cast by Rs.10,000.

(7) Sale of goods to Mr. R for Rs.2,000 was omitted to be recorded.

(8) Amount of Rs.2,395 ofpurchase was wrongly posted as Rs.2,593.

1.10 |Page FACULTY:CA PRATIK NAHTA

1.11 |Page FACULTY:CA PRATIK NAHTA

PROVISION Vs CONTINGENT LIABILITIES

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Lets DANGAL with ICAI RTP QUESTIONS

was deducted from their salaries in the subsequent month.

(ii) Wages paid for erection of Machinery Rs. 8,000.

discount was also allowed for quick payment.

ANS. Journal Entries in the books of Gamma Bros.

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Q2> Classify the following expenditures as capital or revenue expenditure:

(iii) Amount spent to reduce working expenses.

(iv) Amount paid for removal of stock to a new site.

ANS. (i) Revenue Expenditure.

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ANS. (a) Triple Column Cash Book

How would you rectify the errors assuming that :

(a) they were detected before preparation of Trial Balance.

taken to Suspense A/c.

(c) they were detected after preparing Final Accounts.

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Q5> Pass a journal entry in each of the following cases.

(ii) Goods distributed by way of free samples, Rs. 1,000.

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-- Complete repaint of existing building.

-- Installation of a new central heating system.

-- Repainting of a delivery van.

-- Providing drainage for a new piece of water-extraction equipment.

-- Legal fees on the acquisition of land.

-- Carriage costs on a replacement part for a piece of machinery.

ANS. -- Complete repaint: revenue.

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ANS. Triple Column Cash Book

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(i) Sale of furniture credited to Sales Account.

(iii) Credit sale wrongly passed through the Purchase Book.

ANS. (i) Error of Principle.

required to pass necessary journal entries: