A company has total revenue of $560,000 and total expenses of $330,000.If the company overstates sales by $10,000,what is the effect on the company's net profit margin?
A) Net profit margin would be overstated.
B) Net profit margin would be understated.
C) Net profit margin would be unaffected.
D) Net profit margin cannot be computed because overstating sales is unethical.

Question

Quizplus · Accepted Answer

Overstating sales increases total revenue, which increases net profit, leading to an overstated net profit margin.

A Company Has Total Revenue of $560,000 and Total Expenses