MGT101 GDB 1 Solution and Discussion

[zaasmi]

Re: MGT101 GDB 1 Solution and Discussion

Total Marks 4
Starting Date Tuesday, June 02, 2020
Closing Date Monday, June 08, 2020
Status Open
Question Title GDB-01
Question Description

Topic to be tested:

Financial Statements

Learning Objectives:

To understand the presentation of Profit and loss account/Income statement.

GDB 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 business.

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

Required:

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

Note: Be concise and avoid unnecessary detail to attempt the given questions.

Important Instructions:

Your discussion must be based on logical facts.
Do not copy or exchange your answer with other students. Two identical / copied comments will be marked Zero (0) and may damage your grade in the course.
Obnoxious or ignoble answer should be strictly avoided.
Questions / queries related to the content of the GDB, which may be posted by the students on MDB or via e-mail, will not be replied till the due date of GDB is over.

[zaasmi]

@farman-hassan said in MGT101 GDB 1 Solution and Discussion:

@Dilshad-Khan bhi yeha xxx ka kia matlb he

This is example to find out Net profit.

[farman hassan]

@Dilshad-Khan bhi yeha xxx ka kia matlb he

[cyberian]

@zaasmi said in MGT101 GDB 1 Solution and Discussion:

Re: MGT101 GDB 1 Solution and Discussion
Total Marks 4
Starting Date Tuesday, June 02, 2020
Closing Date Monday, June 08, 2020
Status Open
Question Title GDB-01
Question Description
Topic to be tested:
Financial Statements

Learning Objectives:
To understand the presentation of Profit and loss account/Income statement.

GDB 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 business.
Carriage inwards of Rs. 35,000 wrongly reported under the head of selling expenses. Carriage outwards of Rs. 15,000 wrongly reported under the head cost of goods sold. Selling expenses of Rs. 20,000 wrongly reported under the head of administration expenses. Financial expenses of Rs. 13,000 wrongly reported under the head of selling expenses.
Required:
What will be correct amount of Gross profit, if Gross profit before correcting the given errors was Rs. 335,000? What will be correct amount of Cost of goods sold, if the reported amount of sales was Rs. 400,000? What will be the effect of error “A. Carriage inwards of Rs. 35,000 wrongly reported under the head of selling expenses” on Cost of goods sold? (Just mention whether the Cost of goods sold would be overstated, understated or remains unaffected) What will be the effect of given errors on net profit? (Just mention whether the net profit would be overstated, understated or remains unaffected)

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[Dilshad Khan]

@zaasmi said in MGT101 GDB 1 Solution and Discussion:

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

SOLUTION.
A. Carriage towards of Rs. 35,000 wrongly reported under the head of selling expenses. B. Carriage Outwards of Rs. 15,000 wrongly reported under the head cost of goods sold. C. Selling Expenses of Rs. 20,000 wrongly reported under the head of administration expenses. D. Financial Expenses of Rs. 13,000 wrongly reported under the head of selling expenses.
What will be correct amount of Gross profit, if Cross profit before correcting the given errors was Rs. 335,000?

Gross Profit 335,000
Less Carriage Inward 35,000
Gross Profit 300,000

Income Statement:
Sales XXX
Less CGS XXX

Gross Profit XXX
Less Selling Exp. XXX
Less Admin Exp. XXX

Net Profit XXX