Question

5. Goods bought for 25,000 passed through sales day book will result in
(A) No effect on gross profit
(B) Decrease in gross profit
(C) Decrease in net profit
(D)Increase in gross profit​

Answer 1

Answer:

d) Increase in gross profit

Answer 2

It will result in an increase in gross profit.

• Such a condition represents an error
• Any purchases of goods exceeding Rs. 25,000 must be documented in the purchase account, which has a debit side.
• This will boost the gross profit by Rs. 50,000 if it is included in the sales book.
• This will also have a double effect as the entry of Rs. 25,000 that would have been a debit instead became a credit in the sales account.
• Consequently, this will improve gross profit.

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