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 Hari charges 10% depreciation on plant and machinery. On 1st April 2011 he debited Rs. 7,520 paid on installation of plant and machinery to profit and loss account. At the time of preparing final accounts on 31st March, 2012 due to this error,

  • a)
    Net Profit will decrease by Rs. 6,768 

  • b)
    Net Profit will decrease by Rs. 7,520 

  • c)
    Net Profit will decrease by Rs. 8,272

  • d)
    Net Profit will increase by Rs. 6,768 

Correct answer is option 'A'. Can you explain this answer?
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Hari charges 10% depreciation on plant and machinery. On 1st April 201...
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Hari charges 10% depreciation on plant and machinery. On 1st April 201...
Depreciation on Plant and Machinery

- Hari charges 10% depreciation on plant and machinery.
- Depreciation is a non-cash expense that reduces the value of an asset over its useful life.
- It is charged to the profit and loss account.

Error in Debit Entry

- On 1st April 2011, Hari debited Rs. 7,520 paid on installation of plant and machinery to the profit and loss account.
- This entry should have been debited to the plant and machinery account.
- As a result, the profit and loss account was overstated by Rs. 7,520.

Impact on Final Accounts

- At the time of preparing final accounts on 31st March 2012, the error is discovered.
- The amount of Rs. 7,520 should be debited to the plant and machinery account and credited to the profit and loss account to rectify the error.
- The effect of this correction on the profit and loss account will be to decrease the profit by Rs. 6,768 (i.e., 10% of Rs. 7,520).
- The correct amount of depreciation for the year ending 31st March 2012 will be Rs. 752 (i.e., 10% of Rs. 7,520).
- Therefore, the net profit will decrease by Rs. 6,768 due to this error.
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Hari charges 10% depreciation on plant and machinery. On 1st April 2011 he debited Rs. 7,520 paid on installation of plant and machinery to profit and loss account. At the time of preparing final accounts on 31st March, 2012 due to this error,a)Net Profit will decrease by Rs. 6,768b)Net Profit will decrease by Rs. 7,520c)Net Profit will decrease by Rs. 8,272d)Net Profit will increase by Rs. 6,768Correct answer is option 'A'. Can you explain this answer?
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Hari charges 10% depreciation on plant and machinery. On 1st April 2011 he debited Rs. 7,520 paid on installation of plant and machinery to profit and loss account. At the time of preparing final accounts on 31st March, 2012 due to this error,a)Net Profit will decrease by Rs. 6,768b)Net Profit will decrease by Rs. 7,520c)Net Profit will decrease by Rs. 8,272d)Net Profit will increase by Rs. 6,768Correct answer is option 'A'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Hari charges 10% depreciation on plant and machinery. On 1st April 2011 he debited Rs. 7,520 paid on installation of plant and machinery to profit and loss account. At the time of preparing final accounts on 31st March, 2012 due to this error,a)Net Profit will decrease by Rs. 6,768b)Net Profit will decrease by Rs. 7,520c)Net Profit will decrease by Rs. 8,272d)Net Profit will increase by Rs. 6,768Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Hari charges 10% depreciation on plant and machinery. On 1st April 2011 he debited Rs. 7,520 paid on installation of plant and machinery to profit and loss account. At the time of preparing final accounts on 31st March, 2012 due to this error,a)Net Profit will decrease by Rs. 6,768b)Net Profit will decrease by Rs. 7,520c)Net Profit will decrease by Rs. 8,272d)Net Profit will increase by Rs. 6,768Correct answer is option 'A'. Can you explain this answer?.
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