Question

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

Answer 1

If the Closing stock is undervalued by 10000 and opening stock is over valued by 10000.. Then the profit will be undervalued by 20000..

Lets go by an example...

opening stock=100000
closing stock = 200000

Then profit will be = 200000 - 100000= 100000

..if closing stock is undervalued by 10000 and opening stock is overvalued by 10000.. then.

opening stock= 110000
closing stock= 190000

profit= 190000 - 110000 = 80000


As u can see difference in profits 100000 and 80000 above..so if the Closing stock is undervalued by 10000 and opening stock is overvalued by 10000..then the profit will be undervalued by 20000 or the profit will decrease by 20000

Answer 2

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..!!