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Can anyone help me about understatement and overstatement ?

This topic has 1 reply, 2 voices, and was last updated 1 hour ago by John Moffat.

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January 31, 2025 at 5:22 am #715091
abirul
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As I know understatement is a number which is higher than the correct numbers. and overstatement is a number which is less than the correct numbers
Correct number : 270
Understatement: 278
Overstatement: 262
Is that correct ? I’m getting confused whenever i solving asset expenditure and expenses problem i got confused. When a expense correct amount is 600 in question recorded as 520 is that effect in assets understatement or overstatement ?
January 31, 2025 at 10:16 am #715102
John Moffat
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If a number is entered lower than it should be, then it is understated.
If a number is entered higher than it should be, then it is overstated.
So recording 520 when it should be 600 means that at the moment it has been understated.
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