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lbvjy [14]
3 years ago
12

Mr. Hamid is running his small retail business under the name of Hamid Store. He has recently hired Mr. Imran as a junior accoun

tant to maintain the books of accounts of his business. Mr. Imran has little knowledge in accounting. Recently, it has been observed that Mr. Imran wrongly treated installation charges of plant and machinery worth Rs. 500,000 as revenue expenditure under the heading of administration expenses. As a result, financial statements failed to reflect true and fair business affairs. Required: Identify the “type of error” committed by Mr. Imran. What will be the effect of given error on asset side of a balance sheet? (Just mention whether the assets would be overstated, understated or remains unaffected) What will be correct amount of fixed assets, if current assets and fixed assets before correcting this error were Rs. 160,000 and Rs. 940,000 respectively? What will be correct amount of operating profit, if operating loss before correcting this error was Rs. 300,000?Mr. Hamid is running his small retail business under the name of Hamid Store. He has recently hired Mr. Imran as a junior accountant to maintain the books of accounts of his business. Mr. Imran has little knowledge in accounting. Recently, it has been observed that Mr. Imran wrongly treated installation charges of plant and machinery worth Rs. 500,000 as revenue expenditure under the heading of administration expenses. As a result, financial statements failed to reflect true and fair business affairs.
Required:
1. Identify the “type of error” committed by Mr. Imran.
2.What will be the effect of given error on asset side of a balance sheet? (Just mention whether the assets would be overstated, understated or remains unaffected).
3. What will be correct amount of fixed assets, if current assets and fixed assets before correcting this error were Rs. 160,000 and Rs. 940,000 respectively? 4.What will be correct amount of operating profit, if operating loss before correcting this error was Rs. 300,000?
Business
1 answer:
zloy xaker [14]3 years ago
8 0

1) ERROR OF PRINCIPLE

2) Rs. 500,000/-.

3) 14,40,000

4) Profit=2,00,000

Explanation:

1)

Error Committed by Mr. Imran is "ERROR OF PRINCIPLE" . Error of Principle Means a transaction which is not in accordance with Generally accepted accounting principle( GAAP). In this case Mr. Imran has wrongly debited to revenue expenditure instead of debiting to Plant and machinery.

2)

The assets side of Balance sheet is understated by Rs. 500,000/-.

3)

Fixed Assets correct amount= Fixed assets before correcting the errors + installation charges

=9,40,000+5,00,000

=14,40,000

4)

Correct Profit= Profit/(loss) Before correcting the error+Installation Charges

Profit= (3,00,000)+5,00,000

Profit=2,00,000

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Answer:

A debit card

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Debit cards and credit cards have identical looks and are used for making electronic payments. The major difference is that credit cards are a type of credit facility, but debit cards make payments by drawing directly from the customer's account. Debit cards do not attract interests like credit cards. In many instances, debit card payments will not go through if the customer's account has insufficient funds.

5 0
3 years ago
The director of research has asked you to produce a pro forma valuation of a target company using leveraged buyout analysis. A c
statuscvo [17]

6.8  will be the debt-to-EBITDA ratio.

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4 0
2 years ago
Cite two types of costs necessary for a real estate development. How does a construction loan differ from a permanent loan?
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Two types of costs necessary for a real estate development is hard costs and soft costs.

Answer: Hard costs and Soft costs

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According to the given question, the Neal's human resource manager is basically referring to the union ship that is related to the union membership.    

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7 0
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