PRC-1 · Chapter 8 · Question 99 of 100
An unadjusted net profit is Rs. 150,000. It is discovered that closing inventory was understated by Rs. 5,000 and depreciation was overstated by Rs. 2,000. What is the corrected net profit?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rs. 157,000
Explanation
Understating closing inventory inflates COGS, thus artificially lowering profit by 5,000. Overstating depreciation lowers profit by 2,000. Correcting both requires adding 7,000 to the profit: 150,000 + 7,000 = 157,000.
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