ACCA · Question 58 · Preparing a Trial Balance
Section B - Case 2: Single Entity Accounts
Scenario: AquaHarvest Marine Farms
AquaHarvest prepares its financial statements for the year ended 30 September 20X6. The draft profit before adjustments is $120,000.
Issue 1: A payment for marine insurance of $6,000 for the year ending 31 December 20X6 was recorded entirely as an expense in the P&L.
Issue 2: Depreciation on harvesting equipment (Cost $80,000, Acc Dep $30,000) needs to be charged at 20% reducing balance.
Issue 3: A customer went bankrupt owing $2,500. This needs to be written off.
Issue 4: A suspense account has a $4,500 Credit balance because a cash receipt of $4,500 from a credit customer was only recorded in the cash book.
Does clearing the suspense account (Issue 4) affect the draft profit?
Answer options:
Yes, it increases profit by $4,500.
Yes, it decreases profit by $4,500.
No, because the correction only involves statement of financial position accounts.
Yes, because all suspense account clearances affect profit.
65 questions · hints · full answers · grading
Expert