O-LevelAccountingVerification of accounting records7707/11 · May/June 2014 · Q131 Mark
Motor vehicle repairs, $2000, were debited to the motor vehicles account. Motor vehicles are depreciated at 20% per annum on the balance on the account at the year end. What is the effect of the error?
Aeffect on profit for the year: overstated $1600, effect on motor vehicles in statement of financial position: overstated $1600
Beffect on profit for the year: overstated $2000, effect on motor vehicles in statement of financial position: overstated $2000
Ceffect on profit for the year: understated $1600, effect on motor vehicles in statement of financial position: understated $1600
Deffect on profit for the year: understated $2000, effect on motor vehicles in statement of financial position: understated $2000
✓ Correct answer
A: effect on profit for the year: overstated $1600, effect on motor vehicles in statement of financial position: overstated $1600
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