- 1 Marks
FA – May 2014 – L1 – SA – Q6 – Financial Statements Preparation
Discusses the impact of an overvalued closing inventory on profit.
Question
The closing inventories of a firm were overvalued by ₦300,000 due to an error in the inventory valuation sheets. How would the correction of this affect the reported profit?
A. Increase reported profit by ₦300,000
B. Reduce reported profit by ₦300,000
C. No effect on the reported profit
D. Increase reported profit by ₦600,000
E. Reduce reported profit by ₦600,000
Find Related Questions by Tags, levels, etc.
- Tags: Closing Inventory Error, Inventory Valuation, Profit Adjustment
- Level: Level 1
- Topic: Financial Statements Preparation
- Series: MAY 2014
Report an error