Accounting 9706 · AS & A Level · Preparation of financial statements

Preparation of financial statements — practice question

While preparing the financial statements, an accrual for rent payable was recorded as a prepayment. How does this affect profit and current liabilities?

  • Aprofit overstated, current liabilities overstated
  • Bprofit overstated, current liabilities understated
  • Cprofit understated, current liabilities overstated
  • Dprofit understated, current liabilities understated

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