Use the Information Below to Answer the Following Questions -If Salaries Expense Amounting to $3000 Were Eliminated,what Would Be

question 32

Multiple Choice

Use the information below to answer the following questions. Each question is to be considered separately.
The income statement of Berrima Barbed Wire Ltd is:
$\begin{array}{lr} & \$ \\ \text { Revenue } & 22,000 \\ \text { Expense } & \underline{12,000} \\ \text { Profit before income tax } & 10,000 \\ \text { Income tax expense }(30 \%) & \underline{3,000} \\ \text { Net profit } & \underline{7,000}\end{array}$
-If salaries expense amounting to $3000 were eliminated,what would be the effect on net profit after tax?

• A) It would decrease by $2100.
• B) It would decrease by $3000.
• C) It would increase by $2100.
• D) It would increase by $3000.

---

Definitions:

Not-for-Profit Organizations

Entities that operate for purposes other than to make a profit, typically focusing on charitable, educational, or social objectives.

Public Accountants

are certified professionals who provide accounting services, including auditing, tax advice, and financial planning, to the public.

GAAP Standard

Generally Accepted Accounting Principles, the set of accounting standards used in the United States to ensure accuracy and consistency in financial reporting.

Relevance

The degree to which something is related or useful to what is happening or being talked about.