Accounting for IGCSE & O level - Accounting Procedures (Section 25 - No. 19)
A company failed to record an irrecoverable debt. What is the effect on the profit?
Profit is unaffected.
Profit is understated.
Profit is overstated.
Profit will always be zero.
Explanation
Profit will be overstated as irrecoverable debts are not recorded as an expense.
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