Question

When balancing the Cash account, the debit balance brought down has been stated as £34,650 instead...

When balancing the Cash account, the debit balance brought down has been stated as £34,650 instead of £31,750. What will comment on this:

1.

Debit short of £2,900

2.

Trial balance balances

3.

Debit excess of £2,900

4.

None of the above

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Answer #1

Answer is 3. Debit excess of 2,900

Explanation:

Cash account always has a debit balance.

Debit balance brought down has been overstated by 2,900 (34,650-31,750).

Actual Cash Account should be as follows:

Cash account
Balance C/d      
Balance B/d 31,750

Instead of above cash account it was overstated by 2,900 as follows:

Cash account
Balance C/d   
Balance B/d (31,750(actual)+2900(over stated) 34,650

Therefore Debit balance of cash account is in excess of 2,900.

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