Q.State, giving reasons, whether each of the following rectifications would affect the Net Profit of the year:

The test is always: does the rectification entry touch a NOMINAL account (expense/income)? If yes, profit is affected; if the entry only touches Personal/Real/Suspense accounts, profit is untouched.

1. Wages, a NOMINAL (expense) account, was never correctly debited — the ₹500 sat instead in Machinery Account (a Real/asset account), understating this year's expenses. The rectification entry — Wages A/c Dr ₹500; To Machinery A/c ₹500 — now correctly recognises ₹500 of wages expense for the first time. Since a nominal account is debited (an expense increases), Net Profit for the year DECREASES by ₹500 upon this correction.
2. Both Ramesh's account (a Personal account) and Furniture Account (a Real account) are involved in this rectification (Furniture A/c Dr ₹2,000; To Ramesh's A/c ₹2,000, reversing the wrong posting to Ramesh and correcting Furniture's original omission) — no Nominal account appears anywhere in this correction, so Net Profit is completely UNAFFECTED; only the Balance Sheet figures for Furniture and Ramesh's account change. …

Students sometimes assume any rectification affecting a large amount must affect profit — the AMOUNT is irrelevant; only whether a NOMINAL account (an item that would appear in the Trading and Profit and Loss Account) is i …