Multiple choice

A furniture costing Rs. 20,000, purchased on credit from ABC Furnitures, has been entered in the purchase book. What is the rectifying entry?

  1. Dr. purchase A/c and Cr. ABC Furnitures

  2. Dr. ABC Furnitures and Cr. purchase A/c

  3. Dr. furniture A/c and Cr. ABC Furnitures

  4. Dr. furniture A/c and Cr. purchase A/c
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

This is the error of principle because capital expense is treated as revenue expense. So the purchase A/c has to be credited and the furniture A/c has to be debited.

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