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Mr x forgot to record following transaction while preparing his final ALC for the year ended 31st march 2011 Outstanding expenses 20000 Prepaid insurance 2000 Interst receivable on investment 3000 Drawing 6000 The total change in his profit for the year after recording the above transaction would be ?
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Mr x forgot to record following transaction while preparing his final ...
Impact of the forgotten transactions on Mr x's profit for the year ended 31st March 2011


  • Outstanding Expenses: Out of the expenses incurred during the year, Mr x forgot to record an amount of Rs. 20,000 as outstanding expenses. As a result, the expenses for the year were understated by Rs. 20,000, which means that the profit for the year was overstated by the same amount.


  • Prepaid Insurance: Mr x forgot to record an amount of Rs. 2,000 as prepaid insurance. As a result, the expenses for the year were understated by Rs. 2,000, which means that the profit for the year was overstated by the same amount.


  • Interest Receivable on Investment: Mr x forgot to record an amount of Rs. 3,000 as interest receivable on investment. As a result, the revenue for the year was understated by Rs. 3,000, which means that the profit for the year was understated by the same amount.


  • Drawings: Mr x forgot to record an amount of Rs. 6,000 as drawings. As a result, the profit for the year was overstated by Rs. 6,000, which means that the profit for the year was understated by the same amount.



Conclusion: Overall, the impact of the forgotten transactions on Mr x's profit for the year ended 31st March 2011 is a decrease of Rs. 23,000 (Rs. 20,000 + Rs. 2,000 - Rs. 3,000 - Rs. 6,000). This means that the profit for the year was overstated by Rs. 23,000 before recording the forgotten transactions.
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Mr x forgot to record following transaction while preparing his final ALC for the year ended 31st march 2011 Outstanding expenses 20000 Prepaid insurance 2000 Interst receivable on investment 3000 Drawing 6000 The total change in his profit for the year after recording the above transaction would be ?
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