The beginning stock of the current year is overstated by Rs. 500 and closing stock is overstated by Rs. 1200. Effect on profit: 
  • a)
    Rs. 1700 (overstated) 
  • b)
    Rs. 1200 (understated)
  • c)
    Rs. 1700 (understated)
  • d)
    Rs. 700 (overstated)
Correct answer is option 'D'. Can you explain this answer?

CA Foundation Question

2 Answers
Swarnim Sharma answered Jun 15, 2018
The net effect on profit will be 700....because expenses side of trading account has been increased by 500 while income side has increased by 1200. so,the net effect on profit will be their difference..I.e.,700

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