Question

Rs 1,000 received in cash from X (whose account was written off as a bad debt) credited to X's account. This error:

• A. is an error of principle
• B. will affect the Trial Balance
• C. will not affect the profit
• D. None of these

Answer 1

Answer: (D)

None of these

Option D is correct.

Amount received from debtor written off as bad debt credited to debtor's account is an error of posting, the amount of bad debt is removed from the debtors, so it does not affects the debtor's account.

This error will not affect the trial balance because the effect of this error is neutral because the amount had to be credited and in the trial balance the balance will appear, though in different account.

This error affects the net profit because personal account is not included in the profit and loss account and the income will not be recorded , leading in less valuation of the profit of the year.