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1. 

What is the amount of depreciation which should be presented as an expense in the

Income statement for the period ended on 2021?

Find Depreciation Amount?

Cost of Machine = 240,000

Machine time period = 5 years

Machine usage end of year = 2 months

3 , 240,000

Now Find Annual depreciation = 5

= 48000

48000 x 2

Depreciation amount of 2 months =

12

= 8000 


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2. 

What is the amount of trade receivable which should be presented as an asset in

Balance Sheet as on 31st December 2021?

Receivable Amount = 100,000

Debtful Debts = 20000

NRA (net Receviable amount) = receivable amount — debtful debts

Net Receivable Amount = 100,000 — 20000

= 80,000

.. . 80000

vu

5% provision on annual receviable amount = 5%

= 4000

4000 x 2

for 2 months = TT

= 667

Net receviable amount — for 2 months provision

= 80.000 — 667


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3. 

Which fundamental accounting principle was violated due to NOT reporting tl

provision for depreciation and provision for doubtful debts in the Income State

According to the accural bases matching principal was violated

due to not reporting provision for depreciation and provision

for doubtful debts in income statement.


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4. 

What will be the correct amount of profit after incorporating the information given
above?

Given data:

Profit = 560,000

Depreciation = 8000

Provision = 667

Amount of profit = profit — depreciation — provision
= 560,000 — 8000 — 667

= 551,333 rt