O-LevelAccountingAccounting principles and policies7707/12 · May/June 2017 · Q201 Mark

Pooja owns a hair salon. She lives in a flat above the salon. The business pays rent for the whole building. No adjustment has been made in the financial statements for the rent for the flat. What is the effect of omitting this adjustment?

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Aprofit for the year: overstated, capital employed: no effect

Bprofit for the year: overstated, capital employed: understated

Cprofit for the year: understated, capital employed: no effect

Dprofit for the year: understated, capital employed: overstated

✓ Correct answer

C: profit for the year: understated, capital employed: no effect

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Topic: Accounting principles and policies, O-Level Accounting (syllabus 7707). Multiple choice, 1 mark.
Source: O-Level Accounting, May/June 2017 Paper 1 Variant 2, question 20.

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Pooja owns a hair salon. She lives in a flat above the salon. The business pays rent for the whole building. No adjustment has been made in the financial statements for the rent for the flat. What is the effect of omitting this adjustment?

✓ Correct answer

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