12 Questions
What is the effect of under-valuing closing inventory on the income statement?
Decrease income
If purchases are recorded before deducting trade discount, how will this affect the financial statements?
Overstate expenses and liabilities
What does Tim's cost of production consist of?
Prime cost
How does an increase in provision for doubtful debts affect the statement of financial position?
Decrease current assets
In Hassan's case, what does the decrease in capital indicate?
Capital introduced was less than drawings
In the context of a partnership, what does the appropriation account typically include?
Drawings and capital account balances
Based on the information provided for the trader, what is the net profit derived from?
Both credit and cash sales
Which business, from the given data, appears to be managing its overheads most efficiently?
Business A with a gross margin of 40% and a profit margin of 17%
What does a trial balance prepared at 31 December primarily show?
The ledger account balances at 31 December
What type of error occurred when $4000 for motor vehicle repairs was mistakenly entered in the motor vehicle account?
Omission
Why did Zane open a suspense account at the end of the financial year?
The trial balance totals did not agree
How should the error of crediting $520 to the bank account instead of $250 for rent paid be corrected?
Debit bank account $270, credit suspense account $270
Test your knowledge on accounting concepts related to inventory valuation, income statement errors, and intangible assets. Questions cover topics such as under-valued inventory, omitted opening inventory, and intangible asset classification.
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