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

Question 46

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:
$ Revenue 22,000 Expense 12,000 Profit before income tax 10,000 Income tax expense (30%) 3,000 Net profit 7,000 \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.

Correct Answer:

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