A-LevelAccountingPreparation of financial statements9706/12 · May/June 2014 · Q21 Mark
When preparing a sole trader's annual accounts, no adjustment was made for a prepayment at the end of the year. What is the effect of this omission? A current assets overstated, owner's capital overstated B current assets understated, owner's capital understated C profit for the year overstated, trade payables understated D profit for the year understated, trade payables understated
Acurrent assets overstated, owner's capital overstated
Bcurrent assets understated, owner's capital understated
Cprofit for the year overstated, trade payables understated
Dprofit for the year understated, trade payables understated
✓ Correct answer
B: current assets understated, owner's capital understated
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