PRC-1 · Chapter 8 · Question 94 of 100
Bank charges of Rs. 300 were completely omitted from the books. How does this affect the financial statements before correction?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Assets are overstated, Profit is overstated
Explanation
Omitting a bank charge means the bank balance (an asset) is not reduced and an expense is not recorded, artificially inflating both assets and net profit.
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