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Ram earned a profit of Rs. 1,40,000 for the year 2008-09. But at the time of audit, the auditor found that Ram purchased a scooter on 1.4.08 for Rs. 20,000 and charged it as revenue expenses. The auditor advised him to rectify the error now and to charge depreciation @ 15% on scooter. The correct profit after rectification will be:
- a)Rs. 1,57,000
- b)Rs. 1,60,000
- c)Rs. 1,40,000
- d)Rs. 1,17,000.
Correct answer is option 'A'. Can you explain this answer?
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Ram earned a profit of Rs. 1,40,000 for the year 2008-09. But at the t...
Rectification of Errors in Accounting - CA Foundation
Given Information:
- Ram earned a profit of Rs. 1,40,000 for the year 2008-09.
- Ram purchased a scooter on 1.4.08 for Rs. 20,000 and charged it as revenue expenses.
- The auditor advised him to rectify the error now and to charge depreciation @ 15% on scooter.
To find: The correct profit after rectification.
Solution:
1. Adjusting the error:
- Ram purchased a scooter on 1.4.08 for Rs. 20,000 and charged it as revenue expenses.
- This is an error as the scooter is a fixed asset and should have been capitalized and depreciated over its useful life.
- To rectify the error, we need to debit the scooter account and credit the revenue account by Rs. 20,000.
2. Charging depreciation:
- The auditor advised Ram to charge depreciation @ 15% on the scooter.
- The cost of the scooter is Rs. 20,000, and the useful life is not given in the question.
- Assuming the useful life of the scooter is 5 years, the depreciation charge for the year 2008-09 will be Rs. 2,000 (Rs. 20,000 * 15% / 12 months).
- We need to debit the depreciation expense account and credit the accumulated depreciation account by Rs. 2,000.
3. Calculation of Correct Profit:
- The corrected profit will be the original profit of Rs. 1,40,000 plus the depreciation charge of Rs. 2,000, minus the error of Rs. 20,000.
- Corrected Profit = Rs. 1,40,000 + Rs. 2,000 - Rs. 20,000
- Corrected Profit = Rs. 1,22,000
4. Final Answer:
- The correct profit after rectification is Rs. 1,22,000.
- None of the given options match the correct answer.
- However, the closest option is option 'A' which is Rs. 1,57,000.
- Option 'A' could be the correct answer if there is a typo in the question and the original profit was actually Rs. 1,57,000 instead of Rs. 1,40,000.
Therefore, the correct answer is either:
- Rs. 1,22,000 (if the original profit was Rs. 1,40,000)
- Rs. 1,57,000 (if the original profit was Rs. 1,57,000)
Given Information:
- Ram earned a profit of Rs. 1,40,000 for the year 2008-09.
- Ram purchased a scooter on 1.4.08 for Rs. 20,000 and charged it as revenue expenses.
- The auditor advised him to rectify the error now and to charge depreciation @ 15% on scooter.
To find: The correct profit after rectification.
Solution:
1. Adjusting the error:
- Ram purchased a scooter on 1.4.08 for Rs. 20,000 and charged it as revenue expenses.
- This is an error as the scooter is a fixed asset and should have been capitalized and depreciated over its useful life.
- To rectify the error, we need to debit the scooter account and credit the revenue account by Rs. 20,000.
2. Charging depreciation:
- The auditor advised Ram to charge depreciation @ 15% on the scooter.
- The cost of the scooter is Rs. 20,000, and the useful life is not given in the question.
- Assuming the useful life of the scooter is 5 years, the depreciation charge for the year 2008-09 will be Rs. 2,000 (Rs. 20,000 * 15% / 12 months).
- We need to debit the depreciation expense account and credit the accumulated depreciation account by Rs. 2,000.
3. Calculation of Correct Profit:
- The corrected profit will be the original profit of Rs. 1,40,000 plus the depreciation charge of Rs. 2,000, minus the error of Rs. 20,000.
- Corrected Profit = Rs. 1,40,000 + Rs. 2,000 - Rs. 20,000
- Corrected Profit = Rs. 1,22,000
4. Final Answer:
- The correct profit after rectification is Rs. 1,22,000.
- None of the given options match the correct answer.
- However, the closest option is option 'A' which is Rs. 1,57,000.
- Option 'A' could be the correct answer if there is a typo in the question and the original profit was actually Rs. 1,57,000 instead of Rs. 1,40,000.
Therefore, the correct answer is either:
- Rs. 1,22,000 (if the original profit was Rs. 1,40,000)
- Rs. 1,57,000 (if the original profit was Rs. 1,57,000)
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Community Answer
Ram earned a profit of Rs. 1,40,000 for the year 2008-09. But at the t...
As there is revenue expense more we have already less that amount of rs 20000 thus 20000 should be added to the profit nd depreciation of rs 3000 should be subtracted from net profit
that is
140000
+20000
- 3000
= 157000 rs
that is
140000
+20000
- 3000
= 157000 rs
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Ram earned a profit of Rs. 1,40,000 for the year 2008-09. But at the time of audit, the auditor found that Ram purchased a scooter on 1.4.08 for Rs. 20,000 and charged it as revenue expenses. The auditor advised him to rectify the error now and to charge depreciation @ 15% on scooter. The correct profit after rectification will be:a)Rs. 1,57,000b)Rs. 1,60,000c)Rs. 1,40,000d)Rs. 1,17,000.Correct answer is option 'A'. Can you explain this answer?
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Ram earned a profit of Rs. 1,40,000 for the year 2008-09. But at the time of audit, the auditor found that Ram purchased a scooter on 1.4.08 for Rs. 20,000 and charged it as revenue expenses. The auditor advised him to rectify the error now and to charge depreciation @ 15% on scooter. The correct profit after rectification will be:a)Rs. 1,57,000b)Rs. 1,60,000c)Rs. 1,40,000d)Rs. 1,17,000.Correct answer is option 'A'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Ram earned a profit of Rs. 1,40,000 for the year 2008-09. But at the time of audit, the auditor found that Ram purchased a scooter on 1.4.08 for Rs. 20,000 and charged it as revenue expenses. The auditor advised him to rectify the error now and to charge depreciation @ 15% on scooter. The correct profit after rectification will be:a)Rs. 1,57,000b)Rs. 1,60,000c)Rs. 1,40,000d)Rs. 1,17,000.Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Ram earned a profit of Rs. 1,40,000 for the year 2008-09. But at the time of audit, the auditor found that Ram purchased a scooter on 1.4.08 for Rs. 20,000 and charged it as revenue expenses. The auditor advised him to rectify the error now and to charge depreciation @ 15% on scooter. The correct profit after rectification will be:a)Rs. 1,57,000b)Rs. 1,60,000c)Rs. 1,40,000d)Rs. 1,17,000.Correct answer is option 'A'. Can you explain this answer?.
Ram earned a profit of Rs. 1,40,000 for the year 2008-09. But at the time of audit, the auditor found that Ram purchased a scooter on 1.4.08 for Rs. 20,000 and charged it as revenue expenses. The auditor advised him to rectify the error now and to charge depreciation @ 15% on scooter. The correct profit after rectification will be:a)Rs. 1,57,000b)Rs. 1,60,000c)Rs. 1,40,000d)Rs. 1,17,000.Correct answer is option 'A'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Ram earned a profit of Rs. 1,40,000 for the year 2008-09. But at the time of audit, the auditor found that Ram purchased a scooter on 1.4.08 for Rs. 20,000 and charged it as revenue expenses. The auditor advised him to rectify the error now and to charge depreciation @ 15% on scooter. The correct profit after rectification will be:a)Rs. 1,57,000b)Rs. 1,60,000c)Rs. 1,40,000d)Rs. 1,17,000.Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Ram earned a profit of Rs. 1,40,000 for the year 2008-09. But at the time of audit, the auditor found that Ram purchased a scooter on 1.4.08 for Rs. 20,000 and charged it as revenue expenses. The auditor advised him to rectify the error now and to charge depreciation @ 15% on scooter. The correct profit after rectification will be:a)Rs. 1,57,000b)Rs. 1,60,000c)Rs. 1,40,000d)Rs. 1,17,000.Correct answer is option 'A'. Can you explain this answer?.
Solutions for Ram earned a profit of Rs. 1,40,000 for the year 2008-09. But at the time of audit, the auditor found that Ram purchased a scooter on 1.4.08 for Rs. 20,000 and charged it as revenue expenses. The auditor advised him to rectify the error now and to charge depreciation @ 15% on scooter. The correct profit after rectification will be:a)Rs. 1,57,000b)Rs. 1,60,000c)Rs. 1,40,000d)Rs. 1,17,000.Correct answer is option 'A'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA Foundation.
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ample number of questions to practice Ram earned a profit of Rs. 1,40,000 for the year 2008-09. But at the time of audit, the auditor found that Ram purchased a scooter on 1.4.08 for Rs. 20,000 and charged it as revenue expenses. The auditor advised him to rectify the error now and to charge depreciation @ 15% on scooter. The correct profit after rectification will be:a)Rs. 1,57,000b)Rs. 1,60,000c)Rs. 1,40,000d)Rs. 1,17,000.Correct answer is option 'A'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
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