Accounting for IGCSE & O level - Accounting Procedures (Section 10 - No. 6)
If profit is understated, which of the following could happen?
The owners may hesitate to invest in the business
The business may lose out on a loan
The owners may withdraw cash from the business
The business may be unable to obtain the funds to run the business.
Explanation
If profit is understated, the business will look less attractive.
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