Accounting for IGCSE & O level - Accounting Procedures (Section 18 - No. 43)
If the purchases were understated by £200. What is the implication of this error to the financial statement?
The expenses are overstated by £200.
The profit is understated by £200.
The liabilities are overstated by £200.
The profit is overstated by £200.
Explanation
If the purchases (expenses) are understated, then the profit is overstated.
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