O-LevelAccountingVerification of accounting records7707/11 · Oct/Nov 2014 · Q141 Mark

The cost of a motor vehicle was debited to the purchases account in error. What is the effect of this on the profit and assets?

Aprofit: overstated, assets: overstated

Bprofit: overstated, assets: understated

Cprofit: understated, assets: overstated

Dprofit: understated, assets: understated

✓ Correct answer

D: profit: understated, assets: 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 2014 Paper 1 Variant 1, question 14.

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