Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 18 - No. 30)
What will happen to the net profit if the inventory is reduced by goods taken for personal use by the owner?
It will decrease.
It will increase.
It will remain the same.
It depends on the value of the inventory.
Explanation
Inventory going down means reduced purchases, which reduces the cost of goods sold and, therefore, increases net profit.
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