Question

While finalizing the current year’s profit, the company realized that there was an error in the valuation of closing inventory of the previous year. In the previous year, closing Inventory was valued more by ₹50,000. As a result:

A Previous year’s profit is overstated and current year’s profit is also overstated
B Previous year’s profit is overstated and current year’s profit is understated
C Previous year’s profit is understated and current year’s profit is also understated
D No effect on profit
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