Question

closing stock uder value 10000 and opening stock up by 1000,what is profit ?

Answer 1

let us take an example to solve this question

assume

closing stock = 50000

opening stock = 30000

Then profit = closing stock - opening stock

= 50000-30000

=20000

as per statement if closing stock undervalued by 10000

then effect will be

50000-10000 = 40000

opening stock overvalued by 1000

then the effect will be

30000+1000= 31000

now new profit = closing stock - opening stock

=40000-31000

=9000

therefore from our example its clearly known that profit has been reduced .

so ,if Closing stock undervalued by 10000 and opening stock up by 1000, profit will be reduced by 11000(old profit - new profit ie, 20000-9000)

Hope u understood and useful..!!