A-LevelAccountingReconciliation and verification9706/12 · Feb/Mar 2024 · Q61 Mark
At the beginning of the financial year on 1 January, a business acquired a new motor vehicle for $34 000. In error, this was recorded in the account for motor expenses. Motor vehicles are depreciated using the reducing balance method at the rate of 30% per annum. It is estimated that the motor vehicle will have a residual value of $4000 at the end of its life. If the error is not corrected, what will be the effect on the profit for the year ended 31 December?
A$10 200 overstated
B$23 800 understated
C$25 000 understated
D$34 000 understated
✓ Correct answer
B: $23 800 understated
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