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Forums › ACCA Forums › ACCA FA Financial Accounting Forums › Double entry
a company stmt of profit for the year ended 31 december 20×5 showed a net profit of $83,600. it was later found that $18,000 paid for the purchase of a motor van had been debited to the motor expenses account. it is the company’s policy to depreciate motor vans at 25% per year on the straight line basis, with full yrs charge in the year of acquisition. what would the net profit be after adjusting for this error?
The 18000 paid for the van will increase the profit (because it was charged wrongly to an expense account).
Depreciation on the van will then be needed, and this will reduce the profit.