If closing stock is overvalued how to rectify it

Over-valuation of Closing Stock has the following impacts-
a) Decrease profits in the year of over-valuation
b) Increase profits in the subsequent year

Explanation-Closing Stock is recorded on the credit side (reflecting incomes) of Trading A/c. Now, when closing stock is over-valued it means Trading A/c will give inflated gross profit and Profit and Loss A/c will give inflated net profit. Therefore, in the year of over-valuation, to arrive at the correct profit figure, we need to 'decrease' the profit given in the question. You must also be knowing that closing stock of one year becomes the opening stock of the next year. Therefore, over-valued closing stock in current year, indicates over-valued opening stock in the subsequent year. Opening Stock is recorded on the debit side (reflecting expenses) of Trading A/c. Now, when opening stock is over-valued it means Trading A/c will give lower gross profit and Profit and Loss A/c will give lower net profit. Therefore, in the subsequent year of over-valuation, to arrive at the correct profit figure, we need to 'increase' the profit given in the question. ​

Under​-valuation of Closing Stock has the following impacts:
a) Increase profits in the year of under-valuation
b) Decrease profits in the subsequent year

Explanation: Closing Stock is recorded on the credit side (reflecting incomes) of Trading A/c. Now, when closing stock is under-valued it means Trading A/c will give lower gross profit and Profit and Loss A/c will give lower net profit. Therefore, in the year of under-valuation, to arrive at the correct profit figure, we need to 'crease' the profit given in the question. You must also be knowing that closing stock of one year becomes the opening stock of the next year. Therefore, under-valued closing stock in current year, indicates under-valued opening stock in the subsequent year. Opening Stock is recorded on the debit side (reflecting expenses) of Trading A/c. Now, when opening stock is under-valued it means Trading A/c will give inflated gross profit and Profit and Loss A/c will give inflated net profit. Therefore, in the subsequent year of under-valuation, to arrive at the correct profit figure, we need to 'decrease' the profit given in the question.