The income statement of Berrima Barbed Wire Ltd is:
- If the rate of income tax were raised to 40 per cent,what would be the effect on net profit?
A) It would increase by $700.
B) It would decrease by $700.
C) It would increase by $1000.
D) It would decrease by $1000.

Question

The income statement of Berrima Barbed Wire Ltd is: 
- If the rate of income tax were raised to 40 per cent,what would be the effect on net profit?
A) It would increase by $700. 
B) It would decrease by $700. 
C) It would increase by $1000. 
D) It would decrease by $1000.

Quizplus · Accepted Answer

If the income tax rate is increased, the net profit would decrease because more of the income would be taken as tax.

The Income Statement of Berrima Barbed Wire Ltd Is