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The opening stock is overstated by Rs.10,000 and closing stock is understated by Rs.15,000. The impact on the net profit of the current year is
- a)Rs.5,000 overstated
- b)Rs.25,000 overstated
- c)Rs. 5,000 understated
- d)Rs.25,000 understated
Correct answer is option 'D'. Can you explain this answer?
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The opening stock is overstated by Rs.10,000 and closing stock is unde...
Given information:
- Opening stock is overstated by Rs.10,000
- Closing stock is understated by Rs.15,000
Impact on net profit:
- Overstatement of opening stock leads to an overstatement of cost of goods sold (COGS)
- Understatement of closing stock leads to an understatement of COGS
- COGS = opening stock + purchases - closing stock
- Since opening stock is overstated and closing stock is understated, COGS is also overstated
- Overstatement of COGS leads to an understatement of gross profit (GP)
- GP = net sales - COGS
- Since GP is understated, the net profit will also be understated
- Net profit = GP - operating expenses
- Therefore, the impact on the net profit of the current year is Rs.25,000 understated.
Answer: Option D. Rs.25,000 understated.
- Opening stock is overstated by Rs.10,000
- Closing stock is understated by Rs.15,000
Impact on net profit:
- Overstatement of opening stock leads to an overstatement of cost of goods sold (COGS)
- Understatement of closing stock leads to an understatement of COGS
- COGS = opening stock + purchases - closing stock
- Since opening stock is overstated and closing stock is understated, COGS is also overstated
- Overstatement of COGS leads to an understatement of gross profit (GP)
- GP = net sales - COGS
- Since GP is understated, the net profit will also be understated
- Net profit = GP - operating expenses
- Therefore, the impact on the net profit of the current year is Rs.25,000 understated.
Answer: Option D. Rs.25,000 understated.
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Community Answer
The opening stock is overstated by Rs.10,000 and closing stock is unde...
Opening stock is overstated means increase in expense - reduce in net profit
closing stock is understated means decrease in income- reduce in net profit
ie total 10000+15000= 25000- understated or reduced
closing stock is understated means decrease in income- reduce in net profit
ie total 10000+15000= 25000- understated or reduced
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The opening stock is overstated by Rs.10,000 and closing stock is understated by Rs.15,000. The impact on the net profit of the current year isa)Rs.5,000 overstatedb)Rs.25,000 overstatedc)Rs. 5,000 understatedd)Rs.25,000 understatedCorrect answer is option 'D'. Can you explain this answer?
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The opening stock is overstated by Rs.10,000 and closing stock is understated by Rs.15,000. The impact on the net profit of the current year isa)Rs.5,000 overstatedb)Rs.25,000 overstatedc)Rs. 5,000 understatedd)Rs.25,000 understatedCorrect answer is option 'D'. Can you explain this answer? for CA CPT 2024 is part of CA CPT preparation. The Question and answers have been prepared according to the CA CPT exam syllabus. Information about The opening stock is overstated by Rs.10,000 and closing stock is understated by Rs.15,000. The impact on the net profit of the current year isa)Rs.5,000 overstatedb)Rs.25,000 overstatedc)Rs. 5,000 understatedd)Rs.25,000 understatedCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA CPT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The opening stock is overstated by Rs.10,000 and closing stock is understated by Rs.15,000. The impact on the net profit of the current year isa)Rs.5,000 overstatedb)Rs.25,000 overstatedc)Rs. 5,000 understatedd)Rs.25,000 understatedCorrect answer is option 'D'. Can you explain this answer?.
The opening stock is overstated by Rs.10,000 and closing stock is understated by Rs.15,000. The impact on the net profit of the current year isa)Rs.5,000 overstatedb)Rs.25,000 overstatedc)Rs. 5,000 understatedd)Rs.25,000 understatedCorrect answer is option 'D'. Can you explain this answer? for CA CPT 2024 is part of CA CPT preparation. The Question and answers have been prepared according to the CA CPT exam syllabus. Information about The opening stock is overstated by Rs.10,000 and closing stock is understated by Rs.15,000. The impact on the net profit of the current year isa)Rs.5,000 overstatedb)Rs.25,000 overstatedc)Rs. 5,000 understatedd)Rs.25,000 understatedCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA CPT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The opening stock is overstated by Rs.10,000 and closing stock is understated by Rs.15,000. The impact on the net profit of the current year isa)Rs.5,000 overstatedb)Rs.25,000 overstatedc)Rs. 5,000 understatedd)Rs.25,000 understatedCorrect answer is option 'D'. Can you explain this answer?.
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