I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

QUESTION 

Effect on the financial statements I

 

A company's statement of profit or loss for the year ended 31 December 20X5 showed a profit for the 

year of $65,000. It was later found that $18,000 paid for maintenance to motor vehicles had been 

debited to the motor vehicles at cost account and had been depreciated as if it was a new motor vehicle. 

It is the company's policy to depreciate motor vehicles at 25% per year on the straight line basis, with a 

full year's charge in the year of acquisition.  

What would the profit for the year be after adjusting for this error? 

A  

$78,500 

B  

$47,000 

C  

$83,000 

D  

$51,500