Question

Credit sales of Rs.5500 not recorded in the Sales day book. On rectification in subsequent year________.

• A. profit and loss a/c will be credited by Rs.5500
• B. profit and loss adjustment a/c be credited by Rs. 5500
• C. sales a/c will be increased by Rs.5500
• D. no effect

Answer 1

The correct option is B profit and loss adjustment a/c be credited by Rs. 5500

Credit sales of Rs.5500 not recorded in sales day book resulted a short credit to sales account, hence the profit of the year has decreased by the same amount. Its a complete omission of an accounting entry.

If the same transaction is rectified in the subsequent year, this will be done through profit & loss adjustment account by crediting the amount of Rs.5500.