O-LevelAccountingAccounting procedures7707/11 · May/June 2023 · Q271 Mark

P Limited maintains a provision for doubtful debts account. On 1 April 2022, this account had a balance of $6200. The provision should have been increased to $7400 on 31 March 2023, but this adjustment was not made. What was the effect of this error on the retained earnings in the statement of financial position on 31 March 2023?

Aoverstated $1200

Boverstated $7400

Cunderstated $1200

Dunderstated $7400

✓ Correct answer

A: overstated $1200

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Topic: Accounting procedures, O-Level Accounting (syllabus 7707). Multiple choice, 1 mark.
Source: O-Level Accounting, May/June 2023 Paper 1 Variant 1, question 27.

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