Question

1.If expense overstated by RM 100, net profit is __________ A. Overstated by RM100 B. Understated...

1.If expense overstated by RM 100, net profit is __________

  • A. Overstated by RM100
  • B. Understated by RM100
  • C. Remain the same
  • D. None from the above

2.The purchase of supplies RM1,000 by cheque has wrongly debited to inventory account. The correction for the above error is _____________.

  • A. Debit suspense account RM 1,000, credit inventory account RM1,000
  • B. Debit supplies account RM 1,000, credit inventory account RM1,000
  • C. Debit supplies account RM 1,000, credit suspense account RM1,000
  • D. Debit supplies account RM 2,000, credit inventory RM2,000

3.If the Accounts Receivables understated by RM100, it should be RM11,150 instead of RM11,050. The correction of error is ____________

  • A. Debit: Suspense Account RM100 and Credit: Accounts Receivable RM100
  • B. Debit: Accounts Receivable RM100 and Credit: Suspense Account RM100
  • C. Debit: Accounts Receivable RM100 and Credit: Cash RM100
  • D. Debit: Suspense Account RM100 and Credit: Cash RM100
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Homework Answers

Answer #1

Question 1:

Answer: B.Understated by RM100

Explanation:

If expense overstated by RM100, net profit is understated by RM100. If expenses increases by RM100, there is a decrease in net profit by RM100.

Question 2:

Answer: B. Debit supplies account RM1,000, credit inventory account RM1,000

Calculation:

Actual Entry

Journal Entry Debit Credit
Supplies RM1,000
Bank RM1,000

Incorrect Entry

Journal Entry Debit Credit
Inventories RM1,000
Bank RM1,000

Rectification Entry

Journal Entry Debit Credit
Supplies RM1,000
Inventories RM1,000

Question 3:

Answer: B. Debit: Accounts Receivable RM100 and Credit: Suspense account RM100

Calculation:

Rectification Entry

Journal Entry Debit Credit
Accounts Receivable RM100
Suspense RM100

All the best...

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