O-LevelAccountingPreparation of financial statements7707/12 · Oct/Nov 2025 · Q191 Mark

What is the effect on total assets and on equity in the statement of financial position if the value of closing inventory is overstated? [Figure 19.1 - Table showing effect on total assets and equity]

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Aoverstated, overstated

Boverstated, understated

Cunderstated, overstated

Dunderstated, understated

✓ Correct answer

A: overstated, overstated

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Topic: Preparation of financial statements, O-Level Accounting (syllabus 7707). Multiple choice, 1 mark.
Source: O-Level Accounting, Oct/Nov 2025 Paper 1 Variant 2, question 19.

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What is the effect on total assets and on equity in the statement of financial position if the value of closing inventory is overstated? [Figure 19.1 - Table showing effect on total assets and equity]

✓ Correct answer

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