Analysis of Hanuman's Profit and Loss Account

Introduction:
Hanuman's Profit and Loss account showed a net profit of 600000 after considering the closing account of 375000 in 31 March 2016. However, upon scrutiny of the books, the following information was obtained.

1. Depreciation:
Depreciation is the reduction in the value of an asset over time due to wear and tear. It is a non-cash expense that is recorded in the Profit and Loss account. Hanuman's books revealed that depreciation was not considered while preparing the Profit and Loss account. Therefore, the net profit should be adjusted by the amount of depreciation.

2. Bad Debts:
Bad debts are amounts owed to a company that are unlikely to be paid. They are recorded as an expense in the Profit and Loss account. Hanuman's books revealed that a bad debt of 25000 was not considered while preparing the Profit and Loss account. Therefore, the net profit should be adjusted by the amount of bad debt.

3. Interest on Loan:
Interest on loan is the cost of borrowing money. It is recorded as an expense in the Profit and Loss account. Hanuman's books revealed that interest on a loan of 100000 was not considered while preparing the Profit and Loss account. Therefore, the net profit should be adjusted by the amount of interest on loan.

4. Stock Valuation:
Stock valuation is the process of determining the value of inventory on hand. Hanuman's books revealed that the closing stock was undervalued by 20000. Therefore, the net profit should be adjusted by the amount of stock valuation.

Conclusion:
After adjusting for depreciation, bad debts, interest on loan, and stock valuation, the net profit of Hanuman should be recalculated. It is important to ensure that all expenses and revenues are properly recorded in the Profit and Loss account to obtain an accurate picture of the financial performance of the company.

Full question please..