Comments

  1. avatar says

    Sir I don’t understand why your didn’t add 2000 to the profit as the goods still alison’s goods. I though as the bookkeeper considered a sale, he removed in stock and we should resend it in s and increase the profit.

    • Profile photo of John Moffat says

      If we pay $500 for electricity we should debit the expense account.

      Here it has obviously gone to the wrong account – that would not stop the trial balance balancing except that instead of debiting they have credited.

      So……we need to debit telephone 500 to remove it from that account.
      We also need to debit electricity 500 to make things correct.
      In total it means we need to adjust by 1000.

      • avatar says

        Hello sir.Thank you for this amazing lecture.
        However,am still not getting this part.I understood the what you explained about the $1000.But the $500 that we wrongly credited,did it affect our profit?
        I thought that our profit would decrease by $500 only because our expense is actually increasing by $500 only,the other $500 is just to correct the error.
        Because if initially itself we had correctly recorded the entry,wouldn’t have the expense been only $500?

      • Profile photo of John Moffat says

        Because the 500 has been credited to telephone, it would have made the telephone expense lower, which would have increased the profit.

        So we remove it from telephone – the expense is higher and the profit lower by 500.
        Then we charge it to electricity (debit) and that makes the electricity expense higher, and therefore the profit lower by another 500.

        So total affect on profit is 1,000.

  2. Profile photo of mehnoor says

    Hello Sir,
    for example 1, i have some difficulties for the adjustment C).
    If no sale was done, why not remove the whole sale value??? which means profit decreasing by 2400???
    why only 400???? :S … It says it was accounted as a firm sale, and the sale value is 2400???? So by removing it, we should decrease the profit by 2400?? :(

  3. avatar says

    Admin/ Sir Moffat,

    Where can I find the list of answers for the revision mock exams so that I may know how to solve the questions that I answered right/ wrong? Unlike F2 mock test, F3 does not show the answers after u enter the answers. Plz help!!! My exam is on Monday!

  4. avatar says

    Hi. I found question (d) in example 1, trickier than it actually was. My initial reaction was that it would have no effect on profit as it was a prepayment BUT, presumably prepayments just affect the Balance Sheet and NOT the Income Statement. Am I correct, even though I got the answer wrong initially? Kindest P.

    • Profile photo of John Moffat says

      Prepayments affect the income statement as well. If part of the payment was for next year, then the expense for this year is lower than what was actually paid (and therefore the profit is higher).

    • avatar says

      Also. Why are long term liabilities added to capital to calculate ROCE? Why wouldn’t they be subtracted to get net assets. Maybe it’s to to with the Assets = Liabilities + capital equation and/or Assets’ debits and credits are (sort of) reversed? Best P.

  5. Profile photo of akinfenwa says

    @munico1. The sale has been made but, the customer has not yet confirm the sale and because we would like to match the profit to the exact year, we did have to remove the profit until it is being confirmed.
    That is what i think.

  6. avatar says

    Hi admin, in relation to example 1, entry c) in adjustment to profits, could you please explain why it is only the profit removed yet the sale in effect hasn’t been made. Shouldn’t the sale figure also be removed?
    Thanx

  7. avatar says

    in relation to entry c) could someone please explain why it is only the profit removed yet the sale in effect hasn’t been made and the sale figure should in my opinion be also removed.
    Thanx

    • avatar says

      @markadi, The profit would not be adjusted because inventory would have been valued at the lower of cost and NRV. In this case, an adjustment would only be necessary, as in the example if inventory had been valued at the higher of cost and NRV.

  8. Profile photo of Sandbox says

    Is the difference between the error of commission and error of principle that, the error in commission is between similar nature accounts and the error in principle is between different nature accounts? admin?

  9. avatar says

    Great lectures, Feels the same heat as we are sitting in class and interacting with lecturers on his questions/queries. These new lectures are more interactive than the old ones.

    Million of thanks for all this.

  10. avatar says

    Sir, people are facing problems in watching the video as i have tried different browsers for it. Kindly next time manage to put a video which resolution and compatibility is easier and accessible to all the users computers.

    • Profile photo of admin says

      @certifiedca, I’m afraid people with problems are in a minority!
      as lecture works fine,

      you need someone to help you with your PC! or your settings,… how are we to know why you have problems? ask someone in your office/college for help

    • avatar says

      @admin,Hi admin, in relation to example 1, entry c) in adjustment to profits, could you please explain why it is only the profit removed yet the sale in effect hasn’t been made. Shouldn’t the sale figure also be removed?
      Thanx

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