CA Foundation Exam  >  CA Foundation Questions  >  The opening stock is understated by Rs. 20,00... Start Learning for Free
The opening stock is understated by Rs. 20,000 and closing stock is overstated by Rs. 25,000. The net profit the current year is _________ by ________.
  • a)
    Overstated by Rs. 5,000
  • b)
    Overstated by Rs. 45,000
  • c)
    Understated by Rs. 5,000
  • d)
    Understated by Rs. 45,000
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
The opening stock is understated by Rs. 20,000 and closing stock is ov...
Given Information:
- Opening stock is understated by Rs. 20,000.
- Closing stock is overstated by Rs. 25,000.

To find:
- Net profit in the current year.

Solution:
To calculate the net profit for the current year, we need to consider the effect of both the opening and closing stock on the profit.

Effect of understated opening stock:
- The opening stock is understated by Rs. 20,000.
- This means that the cost of goods sold (COGS) will be overstated by Rs. 20,000.
- As a result, the gross profit will be understated by Rs. 20,000.

Effect of overstated closing stock:
- The closing stock is overstated by Rs. 25,000.
- This means that the COGS will be understated by Rs. 25,000.
- As a result, the gross profit will be overstated by Rs. 25,000.

Net effect on profit:
- The combined effect of the understated opening stock and overstated closing stock is Rs. 25,000 (Rs. 25,000 - Rs. 20,000).
- This means that the net profit for the current year is overstated by Rs. 25,000.

Therefore, the correct option is (b) Overstated by Rs. 45,000.
Free Test
Community Answer
The opening stock is understated by Rs. 20,000 and closing stock is ov...
Opening stock undercast by Rs.20000 and closing stock is overcast by Rs.25000
+20000 on Dr side and then closing stock is 25000+20000
then the sum of 25000+20000 =45000 because closing stock is remaining stock of opening stock + purchases
Explore Courses for CA Foundation exam
The opening stock is understated by Rs. 20,000 and closing stock is overstated by Rs. 25,000. The net profit the current year is _________ by ________.a)Overstated by Rs. 5,000b)Overstated by Rs. 45,000c)Understated by Rs. 5,000d)Understated by Rs. 45,000Correct answer is option 'B'. Can you explain this answer?
Question Description
The opening stock is understated by Rs. 20,000 and closing stock is overstated by Rs. 25,000. The net profit the current year is _________ by ________.a)Overstated by Rs. 5,000b)Overstated by Rs. 45,000c)Understated by Rs. 5,000d)Understated by Rs. 45,000Correct answer is option 'B'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about The opening stock is understated by Rs. 20,000 and closing stock is overstated by Rs. 25,000. The net profit the current year is _________ by ________.a)Overstated by Rs. 5,000b)Overstated by Rs. 45,000c)Understated by Rs. 5,000d)Understated by Rs. 45,000Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The opening stock is understated by Rs. 20,000 and closing stock is overstated by Rs. 25,000. The net profit the current year is _________ by ________.a)Overstated by Rs. 5,000b)Overstated by Rs. 45,000c)Understated by Rs. 5,000d)Understated by Rs. 45,000Correct answer is option 'B'. Can you explain this answer?.
Solutions for The opening stock is understated by Rs. 20,000 and closing stock is overstated by Rs. 25,000. The net profit the current year is _________ by ________.a)Overstated by Rs. 5,000b)Overstated by Rs. 45,000c)Understated by Rs. 5,000d)Understated by Rs. 45,000Correct answer is option 'B'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA Foundation. Download more important topics, notes, lectures and mock test series for CA Foundation Exam by signing up for free.
Here you can find the meaning of The opening stock is understated by Rs. 20,000 and closing stock is overstated by Rs. 25,000. The net profit the current year is _________ by ________.a)Overstated by Rs. 5,000b)Overstated by Rs. 45,000c)Understated by Rs. 5,000d)Understated by Rs. 45,000Correct answer is option 'B'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of The opening stock is understated by Rs. 20,000 and closing stock is overstated by Rs. 25,000. The net profit the current year is _________ by ________.a)Overstated by Rs. 5,000b)Overstated by Rs. 45,000c)Understated by Rs. 5,000d)Understated by Rs. 45,000Correct answer is option 'B'. Can you explain this answer?, a detailed solution for The opening stock is understated by Rs. 20,000 and closing stock is overstated by Rs. 25,000. The net profit the current year is _________ by ________.a)Overstated by Rs. 5,000b)Overstated by Rs. 45,000c)Understated by Rs. 5,000d)Understated by Rs. 45,000Correct answer is option 'B'. Can you explain this answer? has been provided alongside types of The opening stock is understated by Rs. 20,000 and closing stock is overstated by Rs. 25,000. The net profit the current year is _________ by ________.a)Overstated by Rs. 5,000b)Overstated by Rs. 45,000c)Understated by Rs. 5,000d)Understated by Rs. 45,000Correct answer is option 'B'. Can you explain this answer? theory, EduRev gives you an ample number of questions to practice The opening stock is understated by Rs. 20,000 and closing stock is overstated by Rs. 25,000. The net profit the current year is _________ by ________.a)Overstated by Rs. 5,000b)Overstated by Rs. 45,000c)Understated by Rs. 5,000d)Understated by Rs. 45,000Correct answer is option 'B'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
Explore Courses for CA Foundation exam

Top Courses for CA Foundation

Explore Courses
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev