FA – MAY 2015 – L1 – SA – Q10 – Correction of Errors

Identify the appropriate journal entry to correct the error of debiting a non-current asset to purchases.

Question

The accounting officer of a trading outfit wrongly debited the purchase of a non-current asset item to purchases account and credited it to the supplier’s account.
Which of the following journal entries is appropriate to correct the error?
A. Dr. Supplier’s account, Cr. Purchases account
B. Dr. Purchases account, Cr. Supplier’s account
C. Dr. Non-current asset account, Cr. Purchases account
D. Dr. Purchases account, Cr. Non-current asset account
E. Dr. Supplier account, Cr. Non-current asset account

Answer

Answer: C
Explanation:
The correction involves transferring the incorrect debit in the purchases account to the non-current asset account, as this is where the asset should be recorded.

Tags: Error Correction, Non-Current Asset, Purchases Account
Level: Level 1

Topic: Correction of errors
Series: MAY 2015

Uploader: Kwame Aikins