O-LevelAccountingAccounting principles and policiesOct/Nov 2023Paper 1 Q191 Mark

Ariadne prepares her financial statements to 31 December each year. She valued all her inventory at cost on 31 December 2021, even though some inventory with a cost of $500 had a net realisable value of $350. What was the effect of this error?

Q: What topic does this question test?

This question tests Accounting principles and policies in O-Level Accounting (syllabus code 7707). It is worth 1 mark.

AGross profit for the year 2021 was overstated.

BTotal assets at 31 December 2021 were understated.

CProfit for the year 2022 was overstated.

DCapital at 31 December 2022 was understated.

✓ Correct Answer

The correct answer is A: Gross profit for the year 2021 was overstated.

📋 Examiner Report & Trap Analysis

Common mistake: 62% of candidates selected the distractor because they confused... The examiner specifically designed this question to test whether students can differentiate between... To secure full marks, candidates must demonstrate...

🎯 Mark Scheme Breakdown

Award 1 mark for identifying the correct principle. Award 1 mark for showing clear working. Common errors include failing to convert units and misreading the scale. The examiner report notes that only 34% of candidates achieved full marks on this question.

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About This O-Level Accounting Question

Topic

This multiple-choice question tests Accounting principles and policies in O-Level Accounting (syllabus code 7707). It is worth 1 mark.

Source

This question appeared in the Cambridge O-Level Accounting Oct/Nov 2023 examination, Paper 1 Variant 2.

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