Question

A firm received a rental income of Rs. 50,000 during a year. It,
however, wrongly recorded it as a rental expense. What is the effect
of this error on the firm's income?
a. -50,000
b. +50,000
c. +100,000
d. -100,000​

Answer 1

Answer:

d -100000 is the answer because instead of +50000 we have shown it as -50000

so firm has got a loss of 50000 instead of a gain of 50000 so the total loss is 100000

Answer 2

Answer:

d. -100,000

Explanation:

We have showed it as -50000 rather than +50000.

Therefore, the firm has a loss of $50,000 rather than a gain of $50,000, making the total loss $100,000.

Accounting errors are inadvertent bookkeeping mistakes that can occasionally be quickly found and corrected. An accountant can quickly identify which account is wrong, for instance, if the trial balance's debits and credits don't equal the same amount. Accounting professionals utilize a specific kind of worksheet to list debit and credit entries: the trial balance. On the financial accounts at the conclusion of the reporting period, the trial balance totals are later carried over. It can be more challenging to find and correct accounting problems when they occur but the trial balance is in balance in some circumstances.

When an accounting entry is posted in the wrong way, such as when a debit is recorded as a credit or vice versa, it is referred to as an entry reversal error.

For instance, finished inventory is debited rather than credited, while cost of goods sold, which includes inventory and raw materials, is credited rather than debited.

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