Question

Errors rectified in subsequent financial year are adjusted through _________.

• A. suspense a/c
• B. by correcting the concerned account
• C. profit and loss adjustment a/c
• D. profit and loss a/c

Answer 1

The correct option is C profit and loss adjustment a/c

Agreement of trial balance proves that the books of account are arithmetically correct. Ideally, all rectifications have to be done before preparing the financial statements. But if the difference are not identified in the same financial year, this will be temporarily parked in suspense account.

The rectification done in subsequent year should be adjusted through profit & loss adjustment account as these does not pertains to the current year.