A Level Accounting (9706)•9706/12/M/J/25
Explanation
Net impact of adjustments on profit or loss Steps:
- Identify each adjustment's nature (income or expense) and amount.
- Classify as increasing (+) or decreasing (-) profit based on type.
- Sum all: +63 expense, -26 income.
- Net total: 63 - 26 = $63 income.
Why the correct option is correct:
- Adjustments to profit or loss are aggregated by net effect, per IAS 1 presentation standards, resulting in $63 net income.
Why the others are wrong:
- A: Ignores income adjustments, only netting expenses.
- C: Treats net as expense, reversing income/expense signs.
- D: Miscalculates total as gross rather than net.
Final answer: B
Topic: Preparation of financial statements
Practice more A Level Accounting (9706) questions on mMCQ.me