A company has produced draft financial statements for the year ended 30 April 19_6 which show a net profit of £108 400. Stock valuations were included as follows:

Required:

(a) Prepare a statement showing the revised net profit of the company for the year ended 30 April 19_6, after taking into account any necessary amendments due to notes 1 to 3 above. (10 marks)

(b) The financial director states that fundamental accounting concepts should be abandoned if their use results in a failure to disclose a ‘true and fair view’ in the financial statements of a limited company.
Comment on the financial director’s statement.

Transcribed Image Text:

Stocks of raw materials (see note 1) Stocks of work-in-progress (see note 2) Stocks of finished goods (see note 3) Quantity of finished goods in stock 30 April 19_5 36.000 59 000 71 000 14 200 units 30 April 19_6 53 000 45 000 77 000 15 400 units