A-LevelAccountingPreparation of financial statements9706/12 · Oct/Nov 2022 · Q111 Mark
In preparing the financial statements, an accrual for rent payable was treated as a prepayment. What effect does this have on the profit and the current liabilities?
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Aprofit: overstated; current liabilities: overstated
Bprofit: overstated; current liabilities: understated
Cprofit: understated; current liabilities: overstated
Dprofit: understated; current liabilities: understated
✓ Correct answer
B: profit: overstated; current liabilities: understated
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