CA Inter P4 · Chapter 7 · Question 3 of 8
If closing stock is valued at a higher figure in cost accounts than in financial accounts, then (other things being equal):
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Reveal answer & explanation
Correct answer: D) Profit as per cost accounts will be higher than profit as per financial accounts
Explanation
Closing stock is credited in arriving at profit, so a higher closing stock value gives a higher profit. When cost accounts value closing stock higher, the cost profit exceeds the financial profit by the difference, which is an item in the reconciliation statement.
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