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.

  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.

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