Accounting for IGCSE & O level - Accounting Procedures (Section 19 - No. 5)
What is the impact on the statement of financial position for not including annual depreciation?
Reduce draft profit by $1,000
Reduce non-current assets by $1,000
Increase the capital by $1,000
Increase draft profit by $1,000
Explanation
The draft profit is overstated because the annual depreciation charge of $1,000 wasn’t included.
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