A-LevelAccountingInventory Valuation / Errors and Suspense AccountsMay/June 2016Paper 1 Q121 Mark
The directors of a company are completing the financial statements for the year ended 30 April 2016. They discover that the inventory at 1 May 2015 was over-valued by $50000. What are the effects of correcting this error?
Aprofit for the year ended 30 April 2016: decrease, retained earnings brought forward at 1 May 2015: decrease
Bprofit for the year ended 30 April 2016: decrease, retained earnings brought forward at 1 May 2015: increase
Cprofit for the year ended 30 April 2016: increase, retained earnings brought forward at 1 May 2015: decrease
Dprofit for the year ended 30 April 2016: increase, retained earnings brought forward at 1 May 2015: increase
✓ Correct Answer
The correct answer is C. This question tests the candidate's understanding of inventory valuation / errors and suspense accounts within the Accountingsyllabus. The examiner's mark scheme requires...
📋 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...
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