A local taxes prepayment of £475 at the reporting date for his financial statements was treated as an accrual in preparing Alex’s a sole trader’s income statement.
As a result, Alex’s profit was?
Select ONE answer:
- Understated by £950
- Overstated by £950
- Understated by £475
- Overstated by £475
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 1
- Correct – Understated by 2 x £475 = £950
- Not correct
- Not correct
- Not correct
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