No.

1 for CA/CWA & MEC/CEC MASTER MINDS

CA - FOUNDATION - CHAPTER END EXAM

SUBJECT: ACCOUNTS
GUNTUR & ALL BRANCHES
Max Marks: 30 Chapter : Rectification of Errors Time : 1Hr.
ACCOUNTS
Question No. 1 is compulsory which carries 10 marks.
Attempt any 2 questions from the remaining 3 questions which carries 10 marks each.
Wherever necessary, suitable assumptions should be made and disclosed
by way of note forming part of the answer.
Working notes should form part of the answer.
QUESTION 1: 10 Marks
a) State with the reasons whether the following statements are True or False. No marks will
be allotted if reason is wrong. [4x1=4M]
(i) The method of rectification of errors depends on the stage at which the errors are detected.
(ii) If the amount is posted in the wrong account or it is written on the wrong side of the account, it is
called error of principle.
(iii) If a purchase return of ₹1,000 has been wrongly posted to the debit of the sales returns account, but
has been correctly entered in the suppliers’ account, then the total of the trial balance would show the
credit side to be ₹1,000 more than the debit.
(iv) The rationale behind the opening of a suspense account is to locate and rectify errors.
b) What is error of principle and how does it affect Trial Balance? [4M]
c) Define the term ‘Prior period items’? [2M]
QUESTION 2: 10 Marks
a) How would you rectify the following errors in the books of ‘Prasad & Sons’ before the preparation of
Trial Balance? [5M]
1. The total of the Purchases Book has been undercast by Rs.500.
2. A payment of Rs.275 for salaries (to Mohan) has been posted twice to Salaries Account.
3. An amount of Rs.151 for a credit sale to Hari, although correctly entered in the Sales Book, has
been posted as Rs.115.
4. Goods worth Rs.1,500 returned by Green & Co. have not been recorded anywhere.
5. Furniture purchased from Gulab & Bros, Rs.2,000 has been entered in Purchases Day Book.
b) Write out the journal entries to rectify the following errors, using a Suspense Account. [5M]
1. A purchase of Rs.4,700 from M/s Sampadh & Sons. was recorded in the accounts of M/s
Sampath & Co. as Rs.7,400. Day Book entry has also been passed incorrectly.
2. Discount allowed Rs. 560 (as per Cash Book) has been posted to General Expenses Account. But
the Cash Book total should be Rs.650, because discount allowed of Rs. 90 to M/s Bantu Bros. has
been omitted.
3. A sale of Rs. 2,000 made to Mr. Ghanshyam was correctly entered in the Sales Day Book but

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wrongly posted to the debit of Mr. Radheshyam as Rs. 200.

4. Loose Tools bought for Rs.1,200 had been inadvertently debited to purchases account for Rs.
2,100.
QUESTION 3: 10 Marks
The following errors, affecting the account for the year 2021 were detected in the books of Jain
Brothers, Delhi:
1) Sale of old Furniture Rs.150 treated as sale of goods.
2) Receipt of Rs.500 from Ram Mohan credited to Shyam Sunder.
3) Goods worth Rs.100 brought from Mohan Narain have remained unrecorded so far.
4) A return of Rs.120 from Mukesh posted to his debit.
5) A return of Rs.90 to Shyam Sunder posted as Rs.9 in his account.
6) Rent of proprietor’s residence, Rs.600 debited to rent A/c.
7) A payment of Rs.215 to Mohammad Sadiq posted to his credit as Rs.125.
8) Sales Book added Rs.900 short.
9) The total of Bills Receivable Book Rs.1,500 left un-posted.
You are required to pass the necessary rectifying entries and show how the trial balance would be
affected by the errors.
QUESTION 4: 10 Marks
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:
(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 nature and amount of the Suspense Account and Pass entries (including narration) for the
rectification of the above errors in the subsequent year’s books.

THE END

CA-FOUNDATION_CHAPTER END EXAM_ACCOUNTS_GUNTUR & ALL BRANCHES_______________________2