A school receives ₹50,000 as fees but records only ₹45,000 The immediate effect is:

Type: MCQ • Marks: 1

A. Overstatement of cash and income

B. Understatement of receipts and cash

C. Overstatement of liabilities

D. No accounting effect

Explanation

Recording ₹45,000 instead of ₹50,000 understates both the receipt and corresponding cash/bank balance by ₹5,000.

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UPSC Principal & Vice Principal Management Finance Administration

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