Anais owns a general store. She makes payments of both capital and revenue items and has both capital and revenue receipts.

a. Complete the following table by placing a tick (✓) to indicate how each item could be classified.

When calculating her profit for the year ended 29 February 20–4, Anais discovered some errors had been made in the accounting records.

Error 1 Redecorating of the original premises had been debited to the premises account.
Error 2 Payment of loan interest had been debited to the loan account.
Error 3 Commission received had been credited to the sales account.
Error 4 Proceeds of sale of office fixtures at book value had been credited to the sales account.

b. Complete the following table by placing a tick (✓) to indicate the effect of each error on the profit for the year.

Transcribed Image Text:

Capital Revenue Capital Revenue expenditure expenditure receipt receipt Loan from AB Limited Purchase of additional premises Legal fees for purchase of additional premises Insurance of additional premises Cash sales Purchase of inventory Proceeds of sale of old motor vehicle at book value Discount received