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O-LevelAccountingVerification of accounting records7707/13 · Oct/Nov 2024 · Q161 Mark

On 1 January 2023 Kate paid $400 for a two-year maintenance contract on her machinery starting on that date. In error this amount was debited to the machinery account. Kate depreciates her machinery at the rate of 20% per annum. What effect did the error have on Kate's profit for the year ended 31 December 2023?

Aoverstated by $80
Boverstated by $120
Cunderstated by $80
Dunderstated by $120

✓ Correct answer

B: overstated by $120

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About this question

Topic
Verification of accounting records, O-Level Accounting (syllabus 7707). Multiple choice, 1 mark.
Source
O-Level Accounting, Oct/Nov 2024 Paper 1 Variant 3, question 16.

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