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Paper 1 · Accruals and prepayments

James prepared his financial statements without adjusting for accrued expenses. What effect will these omissions have on net profit, current assets and current liabilities? | | Net profit | Current assets | Current liabilities | | --- | --- | --- | --- | | A | overstated | no effect | understated | | B | overstated | understated | no effect | | C | understated | no effect | overstated | | D | understated | overstated | no effect |

ANet profit overstated, current assets no effect, current liabilities understated
BNet profit overstated, current assets understated, current liabilities no effect
CNet profit understated, current assets no effect, current liabilities overstated
DNet profit understated, current assets overstated, current liabilities no effect

ZIMSEC Accounting 6001/1 Paper 1 (Multiple Choice), November 2022, Q4

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