Question 1

**Section A**

Draft net profit for the year is $45,000. The following errors are discovered:
1. Closing inventory was undervalued by $3,000.
2. Depreciation of $1,500 was omitted.
3. A payment for rent of $1,000 was debited to the rent account as $100.

What is the revised net profit after correcting these errors? (Enter numbers only)

Accepted Answer

Adjust the draft profit. Undervalued closing inventory means profit was understated (add it). Omitted depreciation means profit was overstated (subtract it). Understated rent expense means profit was overstated (subtract the difference).

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Subtracting the inventory correction instead of adding it, or deducting the full $1,000 for rent instead of the $900 difference.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FA — Financial Accounting Practice Exam 1

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