Accounting Online Program Certification Practice Test

After correcting errors, what will Hood plc's net profit be?

1. £540,000

2. £531,480

3. £550,000

4. £525,000

The correct answer is: £531,480

To determine Hood plc's net profit after correcting errors, it is essential to evaluate the adjustments needed to rectify those mistakes. If the net profit before any corrections was £540,000 and the adjustments to correct the errors amounted to a decrease of £8,520 (for instance, through the discovery of unrecorded expenses or overstated revenues), the resulting net profit would be £531,480. This calculation reflects a decrease in profit as a direct consequence of recognizing previously unaccounted expenses or correcting misstatements that inflate the profit figures. This figure represents the adjusted net profit after all accounting corrections have been applied, maintaining accuracy and compliance with accounting standards. Thus, £531,480 is the correct net profit reflecting the realistic financial position of Hood plc after errors have been appropriately rectified.