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21. Shabbir runs a clothing store. She sold a computer with a net book value of $2000 for $1800. Cash was received but no entries had been made in any accounts. What is the effect of correcting this error on the statement of financial position? non-current assets current assets 2$ 2$ A decrease 1800 increase 1800 В decrease 1800 increase 2000 decrease 2000 increase 1800 decrease 2000 increase 2000

21. Shabbir runs a clothing store. She sold a computer with a net book value of $2000 for $1800. Cash was received but no entries had been made in any accounts. What is the effect of correcting this error on the statement of financial position? non-current assets current assets 2$ 2$ A decrease 1800 increase 1800 В decrease 1800 increase 2000 decrease 2000 increase 1800 decrease 2000 increase 2000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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21. Shabbir runs a clothing store. She sold a computer with a net book value of $2000 for $1800. Cash was received but no entries had been made in any accounts. What is the effect of correcting this error on the statement of financial position? non-current assets current assets $ $ A decrease 1800 increase 1800 decrease 1800 increase 2000 decrease 2000 increase 1800 D decrease 2000 increase 2000 22. The bank statement of a business showed a bank overdraft of $1640 on 1 October 2017. At that date there were uncredited deposits of $380 and unpresented cheques of $460. What was the cash book balance on 1 October 2017? a. $1560 credit b. $1560 debit c. $1720 credit d. $1720 debit 23. Ryan bought a computer, cost $800, and some ink cartridges, cost $50, for use in the business. Both of these amounts were debited to the purchases account. What was the effect of this error on the income statement for the year? cost of sales expenses 24 2$ A overstated 800 understated 850 overstated 850 understated 50 C understated 800 overstated 850 D understated 850 overstated 50 6.
Transcribed Image Text:21. Shabbir runs a clothing store. She sold a computer with a net book value of $2000 for $1800. Cash was received but no entries had been made in any accounts. What is the effect of correcting this error on the statement of financial position? non-current assets current assets $ $ A decrease 1800 increase 1800 decrease 1800 increase 2000 decrease 2000 increase 1800 D decrease 2000 increase 2000 22. The bank statement of a business showed a bank overdraft of $1640 on 1 October 2017. At that date there were uncredited deposits of $380 and unpresented cheques of $460. What was the cash book balance on 1 October 2017? a. $1560 credit b. $1560 debit c. $1720 credit d. $1720 debit 23. Ryan bought a computer, cost $800, and some ink cartridges, cost $50, for use in the business. Both of these amounts were debited to the purchases account. What was the effect of this error on the income statement for the year? cost of sales expenses 24 2$ A overstated 800 understated 850 overstated 850 understated 50 C understated 800 overstated 850 D understated 850 overstated 50 6.
24. Waheed depreciates his buildings at the rate of 2% per annum using the straight line method. He bought land for $200 000. It cost $120 000 to build a warehouse on it. After five years he sold the warehouse for $299 000. What was the profit or loss on disposal? a. $9 000 loss b. $9 000 profit c. $11 000 loss d. $11 000 profit 25. Sumit maintains a position for doubtful debts at 5% of the trade receivables at the end of each financial year. On 1 January 2016 the trade receivables amounted to $3500 and the provision for doubtful debts was $175. The income statement for the year ended 31 December 2016 was debited with $15 for the provision of doubtful debts. How much did the trade receivables owe on 31 December 2016? a. $3040 b. $3200 c. $3610 d. $3800 26. What is the going concern principle? a. Accounting records are prepared assuming that the business will continue to operate in the foreseeable future. b. Income and expense should be accounted for in the same way they were accounted for in previous periods. c. Profit should not be anticipated and losses should be written off as soon as they are known. d. Revenue and costs should be recognized as they are earned or incurred, not when the money is received or paid. 7
Transcribed Image Text:24. Waheed depreciates his buildings at the rate of 2% per annum using the straight line method. He bought land for $200 000. It cost $120 000 to build a warehouse on it. After five years he sold the warehouse for $299 000. What was the profit or loss on disposal? a. $9 000 loss b. $9 000 profit c. $11 000 loss d. $11 000 profit 25. Sumit maintains a position for doubtful debts at 5% of the trade receivables at the end of each financial year. On 1 January 2016 the trade receivables amounted to $3500 and the provision for doubtful debts was $175. The income statement for the year ended 31 December 2016 was debited with $15 for the provision of doubtful debts. How much did the trade receivables owe on 31 December 2016? a. $3040 b. $3200 c. $3610 d. $3800 26. What is the going concern principle? a. Accounting records are prepared assuming that the business will continue to operate in the foreseeable future. b. Income and expense should be accounted for in the same way they were accounted for in previous periods. c. Profit should not be anticipated and losses should be written off as soon as they are known. d. Revenue and costs should be recognized as they are earned or incurred, not when the money is received or paid. 7
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