O-LevelAccountingAccounting principles and policies7707/11 · Oct/Nov 2011 · Q151 Mark
A motor vehicle cost $8000. The price included $36 for petrol. The total payment of $8000 was debited in the motor vehicle account. What is the effect of this error on the income statement and balance sheet?
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Aprofit: overstated by $36, non-current assets: overstated by $36
Bprofit: overstated by $36, non-current assets: understated by $36
Cprofit: understated by $36, non-current assets: overstated by $36
Dprofit: understated by $36, non-current assets: understated by $36
✓ Correct answer
A: profit: overstated by $36, non-current assets: overstated by $36
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