MGT101 GDB No 1 Spring 2017

Dear Students, here you can read MGT101 - Financial Accounting GDB No 1 Solution Spring 2017. MGT101 GDB Opening Date is 13 Jul, 2017 and Closing Date is 19 Jul, 2017. Previously we shared MTH101 GDB No. 2 Solution / Discussion - 2017.

MGT101 GDB Topic:

Capital and Revenue Expenditure, Non-Current Assets & Depreciation and their effects in financial statements.

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MGT101 GDB Question:

Mr. Hamid is working as a junior accountant in accounts department of a business concern. He has little knowledge in accounting. Recently, it has been observed by his senior manager that Mr. Hamid had ignored the distinction between capital and revenue expenditure and charged an amount of Rs. 200,000 incurred on purchase of a non-current asset to the profit and loss account showing a profit of Rs. 500,000. As a result, the financial statements would be failed to reflect true and fair state of affairs of the business. The purchased asset is estimated to have useful life of 5 years with salvage value of Rs. 20,000.


  • What would be the annual depreciation expense under the straight line method?
  • Reporting of non-current assets at written down value rather than at historical cost shows more realistic financial position. Which accounting principle is followed for such reporting?
  • Whether the above error would understate/overstate the capital reported in the balance sheet of business concern?
  • What should have been the correct amount of profit?
Please Note: Your comment should not be greater than 100 words.

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MGT101 GDB Instructions

  • Your discussion must be based on logical facts.
  • The GDB will remain open for 5 working days/ 120 hours.
  • Do not copy or exchange your answer with other students. Two identical / copied comments will be marked Zero (0) and may damage your grade in the course.
  • Obnoxious or ignoble answer should be strictly avoided.
  • Questions / queries related to the content of the GDB, which may be posted by the students on MDB or via e-mail, will not be replied till the due date of GDB is over

MGT101 GDB No 1 Solution

MGT101 GDB No 1 Solution idea shared by M. Usman Akram

MGT101 GDB No 1 Solution Spring 2017
MGT101 GDB No 1 Solution Spring 2017
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