The directors of a company are preparing the financial statements for the year ended 30 April 2016. They find that the inventory at 1 May 2015 had been overstated by $50000. What effects would correcting this error have?
- Aprofit for the year ended 30 April 2016: decrease; retained earnings brought forward at 1 May 2015: decrease
- Bprofit for the year ended 30 April 2016: decrease; retained earnings brought forward at 1 May 2015: increase
- Cprofit for the year ended 30 April 2016: increase; retained earnings brought forward at 1 May 2015: decrease
- Dprofit for the year ended 30 April 2016: increase; retained earnings brought forward at 1 May 2015: increase