JAMB Accounts Principles of Accounts 2016 Paper

Concept:Overstating an expense in the profit and loss account reduces the reported profit.Explanation:Profit is calculated as income less expenses.Revenue expenditure is treated as an expense of the current period.When this expense is overstated, total expenses are too high.Therefore, the profit shown in the profit and loss account is lower than the true profit.This means the net profit is understated.Answer:B. net profit will be understated.