Multiple choice

Outstanding salaries would directly

  1. increase net profit

  2. increase gross profit

  3. decrease net profit

  4. decrease gross profit
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

 Outstanding salaries would decrease net profit, because it is a liability still to be paid and added in debit side of profit and loss A/c. The items shown in debit side of profit and loss A/c decrease the net profit.

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