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Question

A firm has not recorded the bad debts by mistake. Which of the following is the effect of bad debts omission?


A

Net profit will be overstated

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B

Net profit will be understated

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C

Gross profit will be overstated

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D

Gross profit will be understated

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Solution

The correct option is A

Net profit will be overstated


The net profit will be overstated due to this ommission.


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