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 (X)
(B) 10,000 Overstated ()
(C) 17,000 Understated (X)
(D) 17,000 Overstated (X)

Answers: 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 10,000 Overstated.