1.When a company makes a rights issue of equity shares which of the following effects will the issue have?

1. Share premium account is reduced

2. Retained earnings are reduced

3. Assets are increased

4. Investments are increased

Select one alternative:

• 3 only
• 1 and 4
• 1 and 2
• 1 only

2.Which one of the following can the accounting equation be rewritten as?

(a) Assets + profit - drawings - liabilities = closing capital

(b) Assets - liabilities - drawings = opening capital + profit

(c) Assets - liabilities - opening capital + drawings = profit

(d) Assets - profit - drawings = closing capital - liabilities

Select one alternative:

• B
• D
• A
• C

3.Abusiness statement of profit or loss and other comprehensive income for the year ended 31 March 2020 showed a net profit of $97,600. It was later found that $15,000 paid for the purchase of a motor van bought 31 December 2019 had been debited to motor expenses account. It is the company's policy to depreciate motor vans at 20 per cent per year, with a full year's charge in the year of acquisition.

What would the net profit be after adjusting for this error?

Select one alternative:

• $110,350
• $112,600
• $109,600
• $111,850

4.At 1 January 2019, the receivables allowance of Kalu was $13,000. During the year ended 31 December 2019 debts totalling $5,600 were written off. It was decided that the receivables allowance should be $17,000 as at 31 December 2019.

What amount should appear in Kalu's statement of profit or loss for debt expense for the year ended 31 December 2019?

Select one alternative:

• $4,000
• $5,600
• $1,600
• $9,600

5.Nedu, a limited liability company, receives rent for subletting part of its office premises to a number of tenants.In the year ended 31 May 2020, Nedu received cash of $255,200 from its tenants. Details of rent in advance and in arrears at the beginning and end of the year are as follows:

31 May

2020

2019

Rent received in advance

17,100

16,700

Rent owing by tenants

20,500

22,000

All rent owing was subsequently received. What figure for rental income should be included in the statement of profit or loss of Nedu for year ended 31 May 2020?

Select one alternative:

• $300,800
• $336,400
• $253,300
• $341,000

Please let me know the answer and reason.