Principles of Accounts

[Achmerd]

Here is the question....
Paul purchased a motor vehicle for $15 000. He estimated that it would be used for 5 years and then be sold for $2000. Paul decided to spread the depreciation of the motor vehicle equally over its working life at the rate of 20 % per annum.
What is the accumulated depreciation at the end of year 2?
A. $4680 B. $5200 C. $5400 D. $6000

Can anyone pls tell me hw to get the correct answer i.e B…...I want the working. Pls Pls Pls Pls… Help me!!

 

[Silent Hunter]

i am not studying accounts.............but according to me:

its price decreased after 5 years: 13000 $

if : years - price decreased
5 - 13000
then 1 - x

it comes out to be , x = 2600 $

means in 1 year it price would have decreased by 2600 , so in two years = 2 X 2600 = 5200 $

(CORRECT ME IF I AM WRONG)

 

[Achmerd]

You're correct Silent Hunter!!!
(user name= Excited ) told me the correct answer.... now i know that... thanks once again

 

[ahmed_coolguy]

solution
Cost - residual value
15000 - 2000 = 13000

allow depreciation on 13000 with straight line method
it would be 2600 annually so for two years it will be 5200
i hope ypu get your answer

 

[Achmerd]

Inventory (stock) at 31 December 2008 was overstated by $6000.
What was the effect on the gross profit for the year ended 31 December 2009?
A $6000 overstated
B $6000 understated
C $12 000 overstated
D $12 000 understated

The answer is B... but i donno the concept of it.... why gross profit is $6000 understated??? i thought it will be $6000 overstated... hehhe
pls can anyone tell me about these things... pls pls pls .......

 

[ahmed_coolguy]

just remember this thing that opening inventory is in directly propotional to profit,,if it is overstated the profit will decrease and if it is understated the profit will increase.....
while closing inventory is directly propotional to profit,,if it is understated the profit will also decrease and if it is overstated the profit will also increase........

The mcq which you are solving is just little bit confusing ,,,, it is given like this

Inventory (stock) at 31 December 2008 was overstated by $6000.
What was the effect on the gross profit for the year ended 31 December 2009?
A $6000 overstated
B $6000 understated
C $12 000 overstated
D $12 000 understated

but read the question carefully then you will understand that " THE CLOSING INVENTORY OF 2008 WIlL BECOME THE OPENING INVENTORY OF 2009 " so it will understate the profit as it indirectly proportional to profit......

 

[Achmerd]

ohhh ... now i got it.. thanks ahmed coolguy

 

[Achmerd]

Can anyone answer this.........
i need workings pls pls

A limited company provided the following information:
$
issued share capital – 50 000 ordinary shares of $1 each 50 000
profit for the year ended 30 June 2010 before appropriations 13000
transfer to general reserve on 30 June 2010 6 000
interim ordinary share dividend paid during the year 3000

On 30 June 2010 it was decided to use the remaining profit to pay a final ordinary share dividend.
What percentage final dividend would the ordinary shareholders receive?
A 8 % B 14 % C 20 % D 26 %