O-LevelAccountingVerification of accounting records7707/12 · Oct/Nov 2012 · Q141 Mark

The purchase of a motor vehicle was wrongly recorded as motor expenses. What is the effect of this error?

Agross profit is understated

Bprofit for the year is overstated

Ctotal assets are overstated

Dtotal assets are understated

✓ Correct answer

D: total assets are understated

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Topic: Verification of accounting records, O-Level Accounting (syllabus 7707). Multiple choice, 1 mark.
Source: O-Level Accounting, Oct/Nov 2012 Paper 1 Variant 2, question 14.

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