MGT101 GDB No 2 Solution Fall 2017
Dear Students, MGT101 GDB Solution has been added. Here you can read or Download MGT101 - Financial Accounting GDB No 2 Solution and Discussion of Semester Fall 2017. GDB Due Date is 24 January, 2018. We are here to facilitate your learning and we do not appreciate the idea of copying or replicating solutions. Previously we shared MGT101 Current and Past Mid Term Papers Fall 2017. |
| MGT101 GDB No 2 Solution Fall 2017 |
MGT101 GDB Important Instructions:
- Your discussion must be based on logical facts.
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Recommended : MGT101 Short Notes for Mid term from Lec 1 to 22
MGT101 GDB Topic:
- Rectification of errors
MGT101 GDB Learning Objectives:
- To understand the type of errors and effects of identified errors on trial balance and financial statements
MGT101 GDB No 2 Question:
Mr. Aslam is running his small business under the name of Aslam and Sons. He has recently hired Mr. Anwar as a junior accountant to maintain the books of accounts of his business. Mr. Anwar has little knowledge in accounting. Recently, it has been observed that Mr. Anwar made the following errors in the books of accounts.MGT101 GDB Cases
Case A: Goods of Rs. 100,000 bought on credit from Mr. Ali but recorded as Rs. 10,000.Case B: Cash withdrawals from business wrongly debited to the cash account and credited to the drawings account.
MGT101 GDB Required Tasks:
- Identify the “type of error” committed by Mr. Anwar under Case-A given above.
- Identify the “type of error” committed by Mr. Anwar under Case-B given above.
- What will be the effect of given errors on arithmetical accuracy of trial balance? (Just mention whether the trial balance would be overstated, understated or remains unaffected).
- Compute the correct amount of Net profit, if net profit before correcting the above errors was Rs. 150,000.
MGT101 GDB No 2 Solution Fall 2017
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Solution:
- Error of Original Entry
- Error of Commission
- In case 1 trial balance would be understated and in case II trial balance would be unaffected (Not sure )
- Net profit before correct the error is 150000 and After correct the error 90000 charged to goods so net profit will be 150000-90000=60000
MGT101 GDB No 2 Solution Download Link
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As for as Case A is concerned Mr. Anwar has made Error of Original Entry as he has posted incorrect amount to correct account.
ReplyDeleteWhere as Case B is concerned Mr. Anwar has made Error of Principal as he has debited correct amount to the wrong accounts.
Both the above cases are aslo referred as input errors.
According to Case A trial balance would not be affected as arithmetical errors are not present.
As the net profit is Rs.150,000 before making correction, To make correction we will charge Rs.90,000 to Goods as this account has be recorded Rs10,000 instead of Rs.100,000. now after making adjustment entries Net Profit will be = Rs.150,000 - Rs.90,000 => Rs.60,000
Mr. Aslam is running his small business under the name of Aslam and Sons. He has recently hired Mr. Anwar as a junior accountant to maintain the books of accounts of his business. Mr. Anwar has little knowledge in accounting and he is unable to prepare the Bank reconciliation statement and maintaining other necessary records. Recently, following causes of disagreement between bank column of cash book and business bank statement have been observed which was not reconciled by Mr. Anwar. Bank column of cash book showed a debit balance of Rs. 120,000.
ReplyDeleteCheque of Rs. 16,000 issued but not presented yet.
Cheque of Rs. 38,000 deposited into the bank but not credited yet.
Further, he has not reported the provision for doubtful debts of Rs. 10,000 in financial statement at the end of accounting period. Reported net profit by Mr. Anwar in profit and loss account was Rs. 450,000.
Required:
What will the balance as per bank statement after reconciliation the given causes of disagreements between bank column of cash book and bank statement?
What will be the effect on net profit if above mentioned causes of disagreement between bank statement and bank column of cash book are not reconciled.
Which fundamental accounting principle was violated due to the missing of reporting provision for doubtful debts in profit and loss account?
What will be the correct amount of profit after considering the all above mentioned facts?