The Sales Book was overcast by ₹5,000. How is this error rectified after the preparation of the Trial Balance but before Final Accounts?
Answer and explanation
Correct answer: D. Sales Account Dr. ₹5,000 to Suspense Account ₹5,000 (applicable standard)
- Step 1: An overcast in the Sales Book means the credit total of Sales Account is inflated by ₹5,000.
- Step 2: This is a one-sided error that caused a credit excess in the Trial Balance, placed in Suspense Account.
- Step 3: To rectify, debit Sales Account by ₹5,000 to reduce it, and credit Suspense Account by ₹5,000.
Answer
Sales Account Dr. ₹5,000 to Suspense Account ₹5,000 (applicable standard).
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