Day: November 30, 2021

Motor vehicles purchased for £530 000 at the start of the year have been incorrectly depreciated for the whole year using the straight line method at 10% instead of 25%.

Ledger balances after the entries have been posted:

• motor vehicles at cost £530 000
• provision for depreciation £53 000

Which entries will correct the error?

Select ONE answer:

1. debit Profit & Loss £79 500; credit Provision for Depreciation of Motor Vehicles £79 500
2. debit Profit & Loss £132 500; credit Provision for Depreciation of Motor Vehicles £132 500
3. debit Provision for Depreciation of Motor Vehicles £79 500; credit Profit & Loss £79 500
4. debit Provision for Depreciation of Motor Vehicles £132 500; credit Profit & Loss £132 500

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – Dr I/S Cr B/S Provision ==> £530k * 0.25 ==> £132.5 – £53k ==> £79.5 debit P&L
2. Not correct
3. Not correct
4. Not correct

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