Question

$Rs.4,500$ received from M/s Ram was credited to Mr. Ram a/c. How will this affect the profit or loss?

• A. Increase in profit by $Rs.4,500$.
• B. Decreases in profit by $Rs.4,500$.
• C. No affect at all.
• D. Debtors a/c will be overcast by $Rs.4,500$.

Answer 1

The correct option is C No affect at all.

$Rs.4500$ received from M/s Ram is credited to Mr. Ram. Is an error of commission. There will not be any effect on profit & loss account as it is affecting the account of person.

Rectification entry will be passed as under:

Mr. Ram A/c $Dr.4500$

To M/s Ram $4500$