Accounting Multiple Choice Question – 4 March 2022

What is the effect on the financial statements if closing inventory is overvalued?

Select ONE answer:

1. profit for the year – understated & total assets – overstated
2. profit for the year – overstated & total assets – overstated
3. profit for the year – understated & total assets – understated
4. profit for the year – overstated & total assets – understated

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct
3. Not correct
4. Not correct

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