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Question
Goods costing Rs.10,000 taken by the proprietor for personal use were not recorded. The error __________ .
Goods costing Rs.10,000 taken by the proprietor for personal use were not recorded. The error __________ .
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Solution
The correct option is C None of these
When goods taken by proprietor for personal use is not recorded, this is error of omission, i.e., both the debit and credit aspect of the transaction is not recorded. Thus it does not affect the trial balance as any part of the transaction is not recorded. It will affect the net profit because gross profit will be less because of increased value of purchases account balance.
When goods taken by proprietor for personal use is not recorded, this is error of omission, i.e., both the debit and credit aspect of the transaction is not recorded. Thus it does not affect the trial balance as any part of the transaction is not recorded.
It will affect the net profit because gross profit will be less because of increased value of purchases account balance.
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