A petty cash book kept on the Imprest system has an imprest amount of Rs 5,000. If total expenses were Rs 4,200, the reimbursement amount is: MCQ with Answer and Explanation
S1: An error of principle occurs when a transaction is recorded in the wrong class of account. S2: An error of omission occurs when a transaction is completely omitted from the books. Which statement(s) is/are correct?
Explanation:
An error of principle violates fundamental accounting rules (e.g., treating a capital expense as revenue). An error of complete omission means the transaction is not recorded at all. Both definitions are correct.
Assertion (A): Wages paid for erection of a new plant are debited to Plant and Machinery account. Reason (R): All expenses incurred to bring an asset to its working condition are capitalised. Choose the correct option:
A.A is false but R is true.
B.A is true but R is false.
C.Both A and R are true but R is not the correct explanation of A.
D.Both A and R are true and R is the correct explanation of A.
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