Welcome

MGT101 Financial Accounting GDB 1 Solution 2020

MGT101 Financial Accounting GDB 1 Solution 2020

MGT101 Financial Accounting GDB 1 Solution 2020 GDB NO 1 Question:-

Mr. Waseem is working as an accountant in a business organization under the name of ABC Brothers. He has recently prepared financial statements by using the data available in Trial Balance of ABC Brothers and he has presented the financial statements to the Manager accounts of the organization. Manager accounts observed the following errors in the income statement prepared by Mr. Waseem, which produce inaccurate financial affairs of the business. (MGT101 Financial Accounting GDB 1 Solution 2020 below….. )

  1. Carriage inwards of Rs. 35,000 wrongly reported under the head of selling expenses.
  2. Carriage outwards of Rs. 15,000 wrongly reported under the head cost of goods sold.
  3. Selling expenses of Rs. 20,000 wrongly reported under the head of administration expenses.
  4. Financial expenses of Rs. 13,000 wrongly reported under the head of selling expenses.

Required:

  1. What will be the correct amount of Gross profit, if Gross profit before correcting the given errors was Rs. 335,000?
  2. What will be the correct amount of Cost of goods sold, if the reported amount of sales was Rs. 400,000?
  3. What will be the effect of error “ Carriage inwards of Rs. 35,000 wrongly reported under the head of selling expenses” on the Cost of goods sold? (Just mention whether the Cost of goods sold would be overstated, understated or remains unaffected)
  4. What will be the effect of given errors on net profit? (Just mention whether the net profit would be overstated, understated or remains unaffected)

MGT 101 GDB SOLUTION BY STUDENT -1 

1.Correct Gross Profit:

Gross Profit 335,000
Carriage Inward (35,000)
Carriage Outward 15,000
Correct Gross Profit 315,000

 

2. The correct amount of Cost of Goods Sold:

COGS after less the Sales from corrected gross profit = 400,000 – 315,000 = 85,000

Cost of Goods Sold 85,000 Sales 400,000
Gross Profit 315,000
400,000 400,000

 

3.Effect of error “A”:

Cost of goods sold = Understanding

            Reason: Carriage inward was not included in COGS

4.Effect of a given error on Net Profit:

Net Profit = Unaffected

            Reason: Expenses were interpreting in the wrong heads of account.

 

MGT 101 GDB SOLUTION BY STUDENT -2

Another solution idea of MGT101:-

 

Sales 400,000
GF (335,000)
CGS before correcting 65,000
add carriage inward 35,000
less carriage outward (15,000)
Cost of goods sold after correcting the error  

85,000

Gross profit after correcting the error 315,000
  • Cost of goods sold will be understated
  • Net profit will be overstated

 

Hint:- Carriage inward is a part of the cost of goods sold not selling expense Carriage outward is part of selling expense not a cost of goods sold.

Virtual University Helping Material for Exam

Here you can also Download Virtual University of Pakistan All Subjects Handouts, Quiz’s  Solved midterm past papers, and final term past papers with Reference. These are very helpful for the preparation of midterm and Final term Exams. You can also Download Digiskill study materials, FPSC and other Competitive exams solved papers for Preparation of Jobs. You can easily download from these links…………..

download vu solved papersAll Subjects Handouts in Pdf

 Moaaz All Subjects Midterm Papers

     Moaaz All Subjects Final term Papers

Midterm Exam Papers All Subjects  

    Final term Exam Papers All Subjects  

Current  Assignments of all Subjects  

Solved Midterm Papers of all Subjects

      Solved Finalterm Papers of all Subjects 

 Midterm Solved Quiz’s of All Subjects 

     Final term Solved Quiz’s of All Subjects 

Virtual University Final Projects and viva 

 Waqar Siddhu All Subjects Midterm Papers

    Waqar Siddhu All Subjects Finalterm Papers

 

0 0 vote
Article Rating

Leave a Reply

2 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Manchali
8 months ago

very nice work

%d bloggers like this: