ASSIGNMENT 1 Question 1-Multiple choice questions (5 marks) For each of the parts (1) to (5) below there are four possible answers A B, C and D. Choose the ane you consider comrect and wrile your answer in front of each queston in the answer sheet provided (1.mark.each) Stock purchased was debited incorectly to the motor vehicle account. The efect on the 1. statement of comprehensve income would be a) Net profit understated b) Net profit overstated c) Net profit unafected d) Gross profit and net proft affected In the accounting records, the non-current assets are normaly recorded 2 a) At cost b) At book value c) At scrap value d) At replacement value 3 What is depreciation? a) The residual value of a fixed asset plus its original cost b) The cost of a replacement for a fixed asset c) The cost of an asset wearing away d) The part of the aost of the fixed asset consumed during the period of use by the business . Purchases of a motor vehicle entered in the purchases account is an example of an emor of a) Original entry b) Principle c) Compensating d) Commission Page 7 of 13 A company is exploring the impact of the two method of depreciation. On 1 January, t bought a machinery for $15,000. The methods are ) straight line where useful life is 4 years and 5 residual value is $2,000 and ) Reducing balance method-at the rate of 20% per annum Show how the company's profit be afected if the straight line method is used rather than the reducing method? a) Profit increased by $250 b) Profit increased by $300 c) Profit decreased by $500 d) Profit decreased by $1,100