Accounting ProcessQuestion 4677 of 84
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One of your clients Mr. X asked you to finalize his account for the year ended 31st March, 2022. As a basis for audit Mr. X furnished you with the following statement: Dr. Cr. X's Capital 4,668 X's Drawings 1,692 Leasehold Premises 2,250 Sales 8,250 Due from customers 1,590 Purchases 3,777 Purchase Return 792 Loan from Bank 768 Trade Expense 2,100 Trade Payable 1,584 Bills Payable 300 Salaries and Wages 1,800 Cash at Bank 678 Opening Inventory 792 Rent and Rates 1,389 Sales Return 294 16,362 16,362 The closing inventory was Rs. 1,722. Mr. X claims that he has recorded every transaction correctly as the trial balance is tallied. Check the accuracy of the above trial balance and give reasons for the errors, if any. [June 2022, 4 Marks]; [MTP Jan. 2025; Modified Figures-3X]

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Detailed Solution & Explanation

In the Books of Mr. X Corrected Trial Balance as on 31st March, 2022 Name of Accounts Dr. Cr. X's Capital - 4,668 X's Drawings 1,692 - Leasehold Premises 2,250 - Sales - 8,250 Due from customers 1590 - Purchases 3,777 - Purchase Return - 792 Loan from Bank - 768 Trade Expense 2,100 - Trade Payable - 1584 Bills Payable - 300 Salaries and Wages 1,800 - Cash at Bank 678 - Opening Inventory 792 - Rent and Rates 1,389 - Sales Return 294 - 16,362 16,362 Reasons: - 1. Due from customer & opening inventory are treated as assets of the business so they are recorded in the debit side of trial balance. 2. Trade payable & Bills Payable are treated as liabilities so they are recorded on a credit side of trial balance. 3. Purchase return & Sales return always show the credit balance & debit balance respectively.

About This Chapter: Accounting Process

Paper

Paper 1: Accounting

Weightage

25-30%

Key Topics

Journal, Ledger, Trial Balance, Cash Book, Rectification

This chapter covers Journal, Ledger, Trial Balance, Cash Book, Rectification and is part of Paper 1: Accounting in the CA Foundation exam.

View Official ICAI Syllabus

Exam Strategy Tip

This topic carries 25-30% weightage. Focus on understanding core concepts rather than memorizing.

Key Concepts to Understand

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