PRC-1 · Chapter 8 · Question 51 of 100
The draft net profit is Rs. 290,000. Afterwards, two errors were identified and corrected: Payment of office rent expense amounting to Rs. 120,000 was recorded as a credit entry in the cash book and also credited to rent income account. Additionally, a purchase of inventory of Rs. 27,000 was completely omitted from the books. What is the net profit after the above corrections?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Rs. 23,000 profit
Explanation
Net Profit = 290,000 (draft) - 120,000 (reversing false rent income) - 120,000 (recording actual rent expense) - 27,000 (recording omitted purchases) = Rs. 23,000 profit.
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