A trader, whose year end was 31 December 2014, paid business rates of $3000 on 1 November 2014. The business rates were for the six months ending 31 March 2015, but no adjustment had been made for the prepayment.
Which effect does this omission have on the profit for the year?
1 )
overstated $1500
2 )
overstated $2000
understated $1500
4 )
understated $2000
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