PQ Awards Nominations

Please help us to win one of the PQ Magazine awards and send in the voting form >>
You can nominate us in any or all of the following categories: Online College of the Year, Study Resource of the Year, Private Sector Lecturer of the Year, and Accountancy Personality of the Year.

Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>

FA Kaplan Revision kit Q264

This topic has 1 reply, 2 voices, and was last updated 2 months ago by John Moffat.

Viewing 2 posts - 1 through 2 (of 2 total)

Author
Posts
December 7, 2022 at 4:32 am #673809
Manuga
Participant
- Topics: 3
- Replies: 2
Q- Drive incurred bank charges of $40, which was then credited to the bank interest receivable account. What was the effect on profit for the year of recording the bank charges in this way?
A. Profit will be unchanged
B.Profit will be overstated by $80
Dear sir,
I chose answer A but the correct answer is B. Is this an interest income account(not receivable)? If we take it like that then the answer is B but I thought this was a receivable account. Can you explain it to me sir?
December 7, 2022 at 6:20 am #673814
John Moffat
Keymaster
- Topics: 56
- Replies: 51583
Bank charges are an expense and should therefore have been debited to the bank charges account.
Crediting interest receivable increases the profit but the expense should have reduced the profit.
Author
Posts

Viewing 2 posts - 1 through 2 (of 2 total)

You must be logged in to reply to this topic.