A-LevelAccountingPreparation of financial statements9706/12 · Oct/Nov 2010 · Q71 Mark

Closing inventory (stock) has been overvalued. What is the effect on the financial statements? [Table showing effects on net current assets and net profit]

Ano effect, understated

Boverstated, no effect

Coverstated, overstated

Dunderstated, understated

✓ Correct answer

C: overstated, overstated

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Topic: Preparation of financial statements, A-Level Accounting (syllabus 9706). Multiple choice, 1 mark.
Source: A-Level Accounting, Oct/Nov 2010 Paper 1 Variant 2, question 7.

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