Accounting Multiple Choice Question -30 September 2023

Closing inventory has been undervalued.

What is the effect of this error on the financial statements?

Select ONE answer:

1. net current assets: no effect AND profit for the year: understated
2. net current assets: overstated AND profit for the year: overstated
3. net current assets: understated AND profit for the year: no effect
4. net current assets: understated AND profit for the year: 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 4

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

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