Grade 10 JiT - Adjustments

True or False:

A trading stock deficit is realised when the Book value exceeds the Physical stock count.

• False

• True

Identify the GAAP principle:

The tenant has paid R52 000, which includes rent for one month of the following year. Only R48 000 is recorded in the statement of comprehensive income.

• Historical cost

• Prudence

• Matching

• Going concern

True or False:

Only the value of the consumables used during the financial year should be allocated as an income for that year.

• True

• False

Bad debts is an ??? to the business and is entered into the Statement of comprehensive income.

The amount received from debtor that has been written off as a bad debt.

• Income received in advance

• Bad debts recovered

• Accrued expense

• Bad debts

A current liability, Income received in advance is created and is shown in the note ??? in the Statement of Financial Position.

• Fixed assets

• Trade and other receivables

• Cash and cash equivalents

• Trade and other payables

An income has been earned for the financial year, but has not yet been received in full.

Interest on loan amounted to R160 000 for the year. Interest on loan is capitalised.

Interest on loan is therefore ???

• Credited

• Debited

A(n) ??? , Accrued expenses is created and is shown in the note Trade and other payables in the Statement of Financial Position.

• fixed asset

• current liability

• expense

• profit

True or False:

Always subtract prepaid expenses from the expense amount in the pre-adjustment trial balance.

• True

• False