Accounting for IGCSE & O level - Accounting Procedures (Section 24 - No. 33)
What is the effect on the draft profit if an annual depreciation charge of $1,000 had been overlooked?
The profit will be overstated by $1,000.
The profit will be understated by $1,000.
The profit will be unaffected.
The profit will be double-counted by $1,000.
Explanation
Overlooking depreciation expense results in an overstatement of profit.
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