CIMA BA3 · Chapter 7 · Question 7 of 10
A company's draft profit for the year is $45,600. It is then found that closing inventory was understated by $3,000 and an accrual for electricity of $800 was omitted. What is the corrected profit?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) $47,800
Explanation
Increasing closing inventory reduces cost of sales and increases profit by $3,000. Recording the accrual increases expenses and reduces profit by $800. Corrected profit = $45,600 + $3,000 - $800 = $47,800.
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