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Dear sir,
I came across the following question and couldn’t understand the correct answer.
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The debit side of a company’s trial balance totals $800 more than the credit side. Which one of the folloiwng errors would fully account for the difference?
A. $400 paid for plant maintenance has been correctly entered in the cash book and credited to the plant asset account.
B. Discount received $400 has been debited to discount allowed account.
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The correct answer is B but I think both A and B are correct. Can you enlighten me? thanksLiming
The correct entry for A would be Cr Cash and Dr plant maintenance.
What they have done is Cr Cash (which is correct), but Cr plant asset.
The fact that the entry is in the wrong account does not stop them balancing, but because they have two credits instead of a credit and a debit, it means that the total of the credits will be higher than the total of the debits. (whereas their trial balance has the total of the debits being too big).sabeera123: Please do not answer in this forum – it is the Ask the Tutor Forum, and you are not the tutor.
Especially when I have already answered and explained why A is not the correct answer.
(We already knew that B was the correct answer – accalmz had written that B was the correct answer!!!)
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