Menu
Effect of overstatement of opening stock
Hi,
Please advice on the below case:
What should be the effects in the current year if the closing stock of previous year which was recorded at Rs. 30,000, was overstated by Rs. 10,000.?
What should be the JE in the CY?
Replies (3)
Due to overstatement of stock, the net profit for previous year is overstated and the same for current year is understated.
In the current year, to adjust the same the following journal entry is passed:
Retained Earnings A/C .........Dr. 10000
To Stock A/C 10000
Please take care about deffered tax if it is applicable....
Last year's closing stock is overvalued.
This will be bought forward as opening stock of current year,which is again overvalued,hence remove effect of overvaluation by crediting opening stock and debiting Reserves and Surplus.
Recent Topics :
- Best Online Mock Test Series for CA Inter January
- COST OF IMPROVEMENT
- Pillows and Mattresses
- GST Applicability for Reg. / Un-Reg. Indian custom
- Amended GST Act & Rules
- FAST DS 2026 MAIL QUERY
- Does Anyone need CA Foundation books of May2026 at
- Last day for ITR-U for AY 2023-2024 (FY 2022-2023)
- Sale of shares in indian company by a non resident
- Difference in TIS
Related Topics :
CAclubindia
