Accounting for IGCSE & O level - Accounting Procedures (Section 28 - No. 13)
In the provided example, how would the draft income statement be affected if the purchase journal was overstated by £200?
Profit is overstated by £200.
Profit is understated by £200.
Profit is not affected.
Cannot be determined.
Explanation
If the purchases are overstated, this means that the expenses are also overstated, and the profit will be understated by the same amount.
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