Question

current year profit is profit is overstated when current year

1 openning stock is overstated
2 closing stock is overstated
3 purchase is overstated
4 closing stock is understated

MCQ question of account
please read full question carefully and answer the question​

Answer 1

Explanation:

In case of overstatement of closing stock in previous year the profit of the previous year is overstated and the profit of the current year is understated. In previous year the cost of goods sold is reduced by 50,000 there by increasing the gross profit ( sale - COGS) and in the current year closing stock of previous year is the opening stock of current year there by increasing the Cost of goods sold and reducing the profits.