The adjustment required for overvaluation of closing stock, while calculating adjusted profit for calculating goodwill is:(A) Reduction from concerned year's profit.(B) Reduction from next year's profit.(C) Addition to next year's profit.(D) Addition to previous year's profit. Choose the correct answer from the options given below:

When closing stock of a particular year is overvalued:Gross profit and net profit of that concerned year are artificially inflated. Therefore, to find the true adjusted profit, we must perform a Reduction from the concerned year's profit (A).The closing stock of the concerned year becomes the opening stock of the next year. Overvalued opening stock artificially inflates costs and depresses profits in the next year. To correct this, we must perform an Addition to the next year's profit (C).Thus, statements (A) and (C) are correct.