Having Calculated the Profit for the Year You Find That

question 16

Multiple Choice

Having calculated the profit for the year you find that the owner has withdrawn goods which had been included as part of inventory for personal use. What is the effect of this?

• A) Inventory has to be reduced and the expense has to be charged to the income statement
• B) Cost of sales has to be reduced and the amount charged to the owners equity
• C) Profit increases and owners equity increases

---

Definitions:

Traffic Congestion

A condition on road networks that occurs as use increases, characterized by slower speeds, longer trip times, and increased vehicular queuing.

Externality

An externality is a side effect or consequence of an industrial or commercial activity that affects other parties without this being reflected in market prices.

Pollution Reduction

The process or policy of decreasing the amount of pollutants released into the environment, often to protect ecological health and human safety.

Permits

Official documents or licenses that authorize individuals or companies to undertake certain activities, often subject to regulations.