Question

Joe Pickard, a shoe maker, reports his profit without accounting for depreciation of machinery. As a result_______.

Select one:

a. gross profit as well as net profit are overstated

b. gross profit is not affected but net profit is understated

c. gross profit as well as net profit are understated

d. gross profit is not affected but net profit is overstated

Answer 1

Joe Pickard, a shoemaker, reports his profit without accounting for the depreciation of machinery. As a result, gross profit is not affected but net profit is overstated.