Reserve of twenty five thousand rupees should have been debited but was credited. What is the total error effect on distributable profit?

Correct answer: It will be overstated by fifty thousand rupees

The direct answer is option A: distributable profit will be overstated by ₹50,000. A reserve of ₹25,000 should have been debited. A debit reduces the amount available for distribution by ₹25,000. Instead, it was credited. A credit increases the amount by ₹25,000. Comparing the wrong treatment with the correct treatment gives an error of ₹25,000 + ₹25,000 = ₹50,000. Equivalently, correct effect is −₹25,000, while the recorded effect is +₹25,000; the difference is ₹50,000. Option A is correct. Option B, ₹25,000 overstated, counts only one side of the reversal and misses the difference between a debit and a credit. Option C, ₹50,000 understated, has the direction backwards: crediting instead of debiting makes distributable profit appear higher, not lower. Option D, no effect, is wrong because changing a debit into a credit directly changes the balance available for distribution. Memory cue: when the sign changes from debit to credit, the error is twice the amount, and the distributable figure is overstated.