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O-LevelAccountingPreparation of financial statements7707/11 · Oct/Nov 2019 · Q131 Mark

Sales returns were incorrectly recorded as purchases returns in an income statement. What was the effect of this error?

ACapital employed was understated.
BCost of sales was overstated.
CGross profit was understated.
DProfit for the year was overstated.

✓ Correct answer

D: Profit for the year was overstated.

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About this question

Topic
Preparation of financial statements, O-Level Accounting (syllabus 7707). Multiple choice, 1 mark.
Source
O-Level Accounting, Oct/Nov 2019 Paper 1 Variant 1, question 13.

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