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ACCA F3 Adjustments to Profits (part a)

VIVA

View ACCA F3 / FIA FFA lectures Download F3 notes


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Comments

  1. christmaslxq says

    May 25, 2018 at 12:35 pm

    Hi opentuition!
    I have a problem when trying to sort out this question on my exam, could you possibly help me to figure it out.
    draft profit: $50,867
    (1) a cash purchases of $90 has been entered in the cash book but no other entry was made.
    (2) discounts allowed of $75 were entered as a credit in the discount allowed account.
    (3) the balannce on the receivables control a/c was b/d as $43,788 instead of $43,878.
    (4) sales credit notes of $1,314 were only entered in the receivables control a/c.
    (5) A purchases credit note received from a supplier of $150 has not been entered in the books at all.
    the revised profit for the period is:
    A. $49,373
    B. $49,463
    C. $49,538
    D. $49,643
    This is my workings
    draft profit $50,867
    (1) less purchases ($90)
    (2) less discount allowed ($150)
    (3) add balance b/d $90
    ($43,878 – $43,788)
    (4) less returns inwards ($1,314)
    (5) add returrns outwards $150
    adjusted profit $49,553
    it’s my answer but I think it is incorrect.

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    • John Moffat says

      May 25, 2018 at 5:49 pm

      You must ask this kind of question in the Ask the Tutor Forum, and not as a comment on a lecture.

      Log in to Reply
  2. storm says

    December 14, 2017 at 5:11 am

    Thank you for the amazing lecture!!?

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    • John Moffat says

      December 14, 2017 at 7:24 am

      Thank you for your comment 馃檪

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  3. Tamas says

    August 1, 2015 at 10:03 am

    Hi John,

    I am just a bit confused about the fact you said that if closing inventory is lower, profit is lower. Where can I find the example for this? I thought is closing inventory is lower than profit is higher from the cost of sales equation (opening inv. + purchases – closing inv.)?

    Thank you for your help

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    • John Moffat says

      August 1, 2015 at 10:12 am

      If closing inventory is lower, then cost of sales is higher (use the equation you have written and try it with some invented numbers 馃檪 )

      If cost of sales is higher, then profit is lower.

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      • Tamas says

        August 1, 2015 at 10:42 am

        Thank you for the quick answer ! Now I got it 馃榾

    • bukenya says

      August 9, 2015 at 12:07 am

      if the inventory is lower it means we are over stating the cost of sales and consquently lower gross profit and same to profit and reverse happens respectively to the above items if the inventory is higher than expected

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      • John Moffat says

        August 9, 2015 at 10:20 am

        True, although why have you repeated what I had written last week? 馃檪

  4. Wemimo says

    May 26, 2015 at 1:53 pm

    Thank you for this lecture, the additional informations on this example treated touches so many aspect I might not think off. You are the best.

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  5. minhalgulamhussein says

    February 12, 2015 at 4:36 pm

    Sir, your lecture was really amazing. I’ve really understood now and i have gained knowledge. Thank you

    Kind regards.

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  6. josy87 says

    July 8, 2014 at 10:29 am

    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.

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    • John Moffat says

      July 8, 2014 at 6:10 pm

      I do explain this in the lecture!

      The inventory needs increasing by 2000, the sale needs removing (2400) and so the net effect on the profit is to reduce it by 400.

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    • Lee says

      May 21, 2015 at 10:54 am

      Take 2400 from the sales figure and add the inventory 2000 into the closing inventory and you will get the same result

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      • John Moffat says

        May 21, 2015 at 10:56 am

        But that is exactly what I have said!! 馃檪

      • Chau says

        August 10, 2015 at 5:37 pm

        Most of us are non English speaker. It takes us a while to understand what you’ve said:p

      • John Moffat says

        August 10, 2015 at 5:59 pm

        I appreciate that, but I explained in the lecture and I wrote in my reply also. What Lee wrote said no different.

        I am afraid that the exams are in English and although the ACCA try to be fair, so many questions really depend on really understanding the English.

      • John Moffat says

        August 10, 2015 at 6:00 pm

        I appreciate that – I teach in a country where English is not the first language – but I explained in the lecture and I explained in my reply also. What Lee wrote said no different.

        I am sorry, but the exams are in English and although the ACCA try to be fair, so many questions depend on really understanding the English.

    • Lee says

      May 21, 2015 at 11:03 am

      I know john 馃檪 .Was just changing the English around a bit in case new English speakers were still having trouble. By the way hats off to your lectures far better than my university lectures.

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      • John Moffat says

        August 10, 2015 at 6:00 pm

        No problem, and thanks a lot 馃檪

  7. madeleinec says

    February 5, 2014 at 12:04 pm

    great lecture but I am unsure of the last part which was if $500 for electricity had been incorrectly credited to telephone. Why due to this would you need to adjust by $1000?
    Kind regards

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    • John Moffat says

      February 5, 2014 at 1:15 pm

      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.

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      • ArShi says

        April 22, 2015 at 2:26 pm

        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?

      • John Moffat says

        April 22, 2015 at 2:53 pm

        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.

      • ArShi says

        April 22, 2015 at 4:10 pm

        Thank you so much sir.I understood it now.
        Thanks again!

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