PRC-1 · Chapter 8 · Question 32 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
Failing to record bank charges means the bank balance (an asset) is artificially high, and expenses are too low, causing the net profit to be artificially high.
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