Accounting Mcqs

Q.  On scrutiny of a firm‘s books of accounts, it was observed that the following errors have occurred in the previous years but have not yet been rectified.
i. Depreciation for 2011-2012- 7,000 understated
ii. Accrued expenses as at March 31, 2013 – 10,000 understated
The impact of this on the reported net income for the year ending March 31, 2013 is


a. 7,000 Overstated
b. 10,000 Overstated
c. 17,000 Understated
d. 17,000 Overstated


ANSWER: See Answer
 
Net income will be overstated by 10,000 because the accrued expense are
understated. Under/ Overstatement of depreciation of the year 2011-2012 does not affect the net income of current year i.e., 2012-13.]
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