MGT101 GDB No 1 Solution Spring 2018
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| MGT101 GDB No 1 Solution Spring 2018 |
MGT101 GDB Topic:
- Rectification of Errors and Financial Statements
MGT101 GDB Learning Objectives:
- To understand the basic concepts regarding the rectification of errors.
- To understand the effects of errors on financial performance.
MGT101 GDB Question:
Akram is running a small business under the name of Akram Bros. He has recently hired Anwar as a junior accountant to maintain the books of accounts of his business. Owing to little knowledge in accounting, Anwar could not perform well and following errors have been found in his work. You are required to give your opinions/answers as required in all the following cases regarding the given errors.There was an error in the valuation of closing stock of the previous year. In the previous year, the closing stock was valued more by Rs. 5,000. What will be its effect on current year’s profit? (Just mention whether the current year’s profit will be overstated, understated or remains unaffected).
Amount of Rs. 1,000 was paid as rent to Iqbal, but it was wrongly debited to a debtor Ihsan’s account. What will be the effect of this error on arithmetical accuracy of trial balance? (Just mention whether the arithmetical accuracy of trial balance will be overstated, understated or remains unaffected).
A revenue expenditure of Rs. 2,000 is treated as a capital expenditure in the books of accounts. What will be the effect of this error on Net profit? (Just mention whether the profit will be overstated, understated or remains unaffected).
What will be the correct amount of profit if the profit before the correction of above errors is Rs. 40,000?
MGT101 GDB No 1 Solution Spring 2018
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Recommended : How to avoid Plagiarism or Zero Marks in Assignments / GDBs
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| MGT101 GDB No 1 Solution Sample Page Preview Spring 2018 |
MGT101 GDB 1st 2019
ReplyDeleteTopic to be tested:
Depreciation and Financial Statements
Learning Objectives:
To understand the basic concepts regarding the methods of charging depreciation on Non-Current Assets.
To understand the effect of charging depreciation on financial performance.
GDB Question
On 1st April 2016, a manufacturing firm bought a machine for Rs. 120,000. The estimated useful life of this machine was determined by an engineering firm as 5 years with no residual value. Owing to a sudden mechanical breakdown in the machinery, it started losing its productivity. Management of the firm had decided to replace this machinery with the most updated version to maintain the productivity. The machine was sold on 31st December 2017 for Rs. 65,000 and on the same date a new machine was purchased. The firm uses straight line method of depreciation for its all non-current assets on “the basis of use”. Its reported net profit in profit and loss account was Rs. 40,000 on 31st December 2017. The firm closes its books of account on 31st December each year.
Required:
1 - What will be the amount of:
depreciation on 31st December 2016?
accumulated depreciation at the time of disposal of machinery?
loss on the disposal of machine?
2 - What will be the effect on reported profit as at 31st December 2017, if the firm changes its depreciation method from straight-line to written down value using 20% rate of depreciation per annum. (Working is not required. Just mention either the “Profit will be increased by Rs._____” Or “Profit will be decreased by Rs._____” or “ No effect on profit”).
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