A company has total revenue of $560,000 and total expenses of $330,000.If the company overstates sales by $10,000,how would the net profit margin be affected?

Question

Quizplus · Accepted Answer

Overstating sales means that the revenue would be shown as higher than its actual amount, leading to a higher net profit. As net profit margin is calculated by dividing net profit by total revenue, a higher net profit would result in a higher net profit margin. Therefore, overstating sales would overstate the net profit margin.

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