Accounting Online Program Certification Practice Test

After adjusting for errors, what is Smyths's corrected profit for the year?

1. £319,100

2. £330,000

3. £300,000

4. £310,700

The correct answer is: £319,100

To determine Smyths's corrected profit for the year, it is essential to thoroughly review the adjustments made for any errors in the initial profit calculation. Typically, profit figures may be impacted by errors in revenue recognition, expense misclassification, or calculation errors. When adjustments for these errors are implemented, they might lead to an increase or decrease in the reported profit depending on the nature and significance of the adjustments. The goal is to present a more accurate reflection of the company's financial performance. In this scenario, if the calculated corrected profit is £319,100, this figure likely results from detailed calculations incorporating all necessary adjustments, accurately representing Smyths's financial health after ensuring that all previous misstatements have been rectified. Such adjustments can involve revising the amounts of income or expenses which were initially overstated or understated. Thus, £319,100 stands as the final corrected profit figure, showcasing that all data is now accurately represented following the appropriate corrections. This ensures that the financial statements can be relied upon for decision-making by stakeholders.