O-LevelAccountingAccounting procedures7707/11 · May/June 2019 · Q141 Mark

Ravi's financial year ends on 30 April. Ravi bought a motor vehicle for $8000 on 1 May 2016 and sold it for $4050 on 1 May 2018. He uses the diminishing (reducing) balance method of depreciation at 20% per annum. What would be recorded in the income statement for the year ended 30 April 2019 for the disposal of the motor vehicle?

A$750 loss

B$750 profit

C$1070 loss

D$1070 profit

✓ Correct answer

A: $750 loss

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Topic: Accounting procedures, O-Level Accounting (syllabus 7707). Multiple choice, 1 mark.
Source: O-Level Accounting, May/June 2019 Paper 1 Variant 1, question 14.

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