- 1 Marks
Question
The value of goods taken by the proprietor of a firm for his consumption will affect all but ONE of the following:
A. Gross profit
B. Net profit
C. Inventory balance
D. Company’s capital
E. Inventory valuation.
Answer
D
Explanation:
When the proprietor consumes goods, it reduces the gross profit, net profit, and inventory balances, as well as affects the inventory valuation. However, it does not affect the company’s capital directly. Therefore, the correct answer is option D.
- Tags: Gross Profit, Inventory Valuation, Net Profit
- Level: Level 1
- Topic: Elements of Financial Statements
- Series: MAY 2012
- Uploader: Theophilus