If goods worth 1,750 returned to a supplier is wrongly entered in sales return book as 1,570, then
Correct answer: B. Gross Profit will decrease by 3,320
- A. Net Profit will decrease by 3,140
- B. Gross Profit will decrease by 3,320
- C. Gross Profit will decrease by 3,500
- D. Gross Profit will increase by 3,320
Explanation
The incorrect entry reduces sales by 1,570, whereas the correct purchase return should reduce purchases by 1,750. Compared with the correct result, gross profit is therefore lower by 1,570 plus 1,750, or 3,320.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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