O-LevelAccountingAccounting procedures7707/12 · Oct/Nov 2025 · Q151 Mark

At the beginning of the year on 1 January, Zac paid $420 for an equipment repair. He entered this amount in the equipment account. At the end of the year on 31 December, depreciation of 20% per annum was charged on the balance of the equipment account, using the straight-line method. What was the overall effect on the book value of the equipment on 31 December?

A$84 understated

B$336 overstated

C$420 overstated

D$504 understated

✓ Correct answer

B: $336 overstated

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Topic: Accounting procedures, O-Level Accounting (syllabus 7707). Multiple choice, 1 mark.
Source: O-Level Accounting, Oct/Nov 2025 Paper 1 Variant 2, question 15.

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