Accounting 9706 · AS & A Level · Reconciliation and verification

Reconciliation and verification — practice question

In an income statement, carriage outwards of $5000 has been entered as carriage inwards. Carriage inwards of $3000 has been entered as carriage outwards. What are the effect(s) of these errors on the profit?

  • Agross profit overstated by $2000; profit for the year understated by $2000
  • Bgross profit overstated by $8000; profit for the year no effect
  • Cgross profit understated by $2000; profit for the year no effect
  • Dgross profit understated by $8000; profit for the year overstated by $8000

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