plz can anyone help me in these questions??
Q1. Which error affects the blancing of a trial balance?
A) a purchase invoice, $2000 completely omitted from the books.
B) a sale on credit, $500, entered in the sales journal as $550
C) purchase of a machine, $5000, entered in purchases account
D) the purchases journal undercast by $100.
A > Error of omission, will not affect the trial balance.
B > Sales journal is a book of prime entry, it is an error of original entry, again will not affect the trial balance.
C > Entered in the Purchases Account > Debit Entry. Should have been a debit entry in the Assets Account. Both are debit entries. Error of principle. Again, will not affect.
D > Purchases Journal's total will be transferred to the Purchases Control Account. The corresponding total will be that of the Purchases Ledger (i.e. the total of all creditors' balances). Both totals will differ by $100. Trial Balance will fail to agree.plz can anyone help me in these questions??
Q2. Farad's financial year ends on 31 December.
on 31 December 2007 his account included:
$
equipment at cost 18 000
provision for depreciation of equipment 7 000
on 1 January 2008 Farad purchased equipment for $ 12 000.
Equipment is depreciated at 25% per annum using the straight line method.
What would be the provision for depreciation of equipment on 31 December 2008?
A) $5750 B) $7500 C) $ 12 750 D) $14 500
Dep. on equipment at cost value $ 18 000 (what he already had) = 4 500
+ dep. on equipment he bought at 1 Jan (full year) = 3 000
You are asked for provision on depreciation, i.e. TOTAL depreciation of equipment since it's been existing in the business. You add all 3 values, i.e.
4 500+ 3 000+ 7 000= 14 500.
Q3) A business values its stock at $35 600
This includes $2500 for goods which can be only sold for $800.
At which value should stock be recorded in the final accounts?
A) $33 100 B) $33 900 C) $34 800 D) $ 35 600
Thanx in advance. I'd appreciate any help.
Stock is valued at lower of cost or net realisable value (N.R.V.), according to IAS 2. Stock has been valued at $ 35 600. "This includes $2500 for goods which can be only sold for $800." You remove the $2 500 faulty stock => $ 33 100.
Faulty stock => Cost = $2 500, and N.R.V = $800.
N.R.V. is lower, stock will be valued in the accounts at $800.
Add back $800 for the faulty stock to get a total stock value of
$33 900.
