The effect of overstating revenue expenditure in the profit and loss account is that the?

A. opening stock will be increased
B. net profit will be understood
C. net profit will be overstated
D. opening stock will be decreased

Correct Answer:

Option B – net profit will be understood

Explanation

As a general rule, an increase in any type of business expense lowers profit. overstating expenditure would decrease or understate the net profit