📒
The beginnings inventory of the current year is overstated by 5,000 and closing inventory is overstated by 12,000. These errors will cause the net income for the current year by
Accountingmedium
A17,000 (overstated.
B12,000 (understated.
Overstatement of closing stock results in overstatement of profit and overstatement of opening stock results in understatement of profit. In the instant case, there will be overstatement of profit by 12,000 – 5,000 = 7,000.
D7,000 (understated.
Correct Answer: C. Overstatement of closing stock results in overstatement of profit and overstatement of opening stock results in understatement of profit. In the instant case, there will be overstatement of profit by 12,000 – 5,000 = 7,000.
Related Questions
Accounting
The assets which have some market value are called ____________?
Accounting
Assets having physical existence are called ___________?
Accounting
When owner withdraw cash for its private use, it is called ___________?
Accounting
Building and furniture are called ____________?
Accounting
Which of the following is true about a trial balance?