A business had a draft profit for the year of $200000.

The following items were then discovered.

1 Depreciation charges had been overstated by $20000.
2 The value of closing inventory was overstated by $15000.
3 A year-end accrual for wages was needed, $8000.
4 A year-end adjustment for prepaid insurance, $2500, was required.

What was the corrected profit for the year?

Q: What topic does this question test?

This question tests Adjustments to Financial Statements in A-Level Accounting (syllabus code 9706). It is worth 1 mark.

Q: Which exam paper is this question from?

This question appeared in the Cambridge A-Level Accounting May/June 2021 examination, Paper 1 Variant 2 (9706_s21_qp_12.pdf).

Question

A business had a draft profit for the year of $200000.

The following items were then discovered.

1 Depreciation charges had been overstated by $20000.
2 The value of closing inventory was overstated by $15000.
3 A year-end accrual for wages was needed, $8000.
4 A year-end adjustment for prepaid insurance, $2500, was required.

What was the corrected profit for the year?

Oracle Prep · Accepted Answer

The correct answer is B: $199 500.

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