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What will be the effect when return inward is wrongly entered as return outward?
- a)Gross Profit is increased by Rs. 100
- b)Gross Profit is decreased by Rs. 100.
- c)Gross Profit is increased by Rs. 200.
- d)Gross Profit is decreased by Rs. 200.
Correct answer is option 'C'. Can you explain this answer?
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What will be the effect when return inward is wrongly entered as retur...
Effect of wrongly entered return inward as return outward on Gross Profit
When return inward is wrongly entered as return outward, it will have a significant impact on the Gross Profit of the business. The Gross Profit is the difference between the net sales and the cost of goods sold. Let us understand the effect of the wrong entry on Gross Profit:
1. Increase in Sales Return:
When return inward is entered as return outward, it will lead to an increase in sales return. This is because the goods that were supposed to be returned by the customers are now considered as sold goods. Hence, there will be an increase in the sales return amount.
2. Decrease in Cost of Goods Sold:
As the goods that were supposed to be returned by the customers are now considered as sold goods, the cost of goods sold will decrease. This is because the cost of goods returned is not considered while calculating the cost of goods sold.
3. Increase in Gross Profit:
Since the sales return has increased and the cost of goods sold has decreased, the Gross Profit will increase. This is because the Gross Profit is calculated as the difference between the net sales and the cost of goods sold. Hence, if the sales return increases and the cost of goods sold decreases, the Gross Profit will increase.
Conclusion:
In conclusion, when return inward is wrongly entered as return outward, it will lead to an increase in sales return, decrease in cost of goods sold, and an increase in Gross Profit. It is important to ensure that the correct entries are made to avoid any errors in the financial statements.
When return inward is wrongly entered as return outward, it will have a significant impact on the Gross Profit of the business. The Gross Profit is the difference between the net sales and the cost of goods sold. Let us understand the effect of the wrong entry on Gross Profit:
1. Increase in Sales Return:
When return inward is entered as return outward, it will lead to an increase in sales return. This is because the goods that were supposed to be returned by the customers are now considered as sold goods. Hence, there will be an increase in the sales return amount.
2. Decrease in Cost of Goods Sold:
As the goods that were supposed to be returned by the customers are now considered as sold goods, the cost of goods sold will decrease. This is because the cost of goods returned is not considered while calculating the cost of goods sold.
3. Increase in Gross Profit:
Since the sales return has increased and the cost of goods sold has decreased, the Gross Profit will increase. This is because the Gross Profit is calculated as the difference between the net sales and the cost of goods sold. Hence, if the sales return increases and the cost of goods sold decreases, the Gross Profit will increase.
Conclusion:
In conclusion, when return inward is wrongly entered as return outward, it will lead to an increase in sales return, decrease in cost of goods sold, and an increase in Gross Profit. It is important to ensure that the correct entries are made to avoid any errors in the financial statements.
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Community Answer
What will be the effect when return inward is wrongly entered as retur...
When return inward is taken wrongly and entered in return outward .
if any amount entered wrong. it effects on the balancing amount (gross profit) will be double
ie, rs 100 taken wrongly on other side it effects the double amount to gross profit.
gross profit is increasing because sales returns are taken purchase side
if any amount entered wrong. it effects on the balancing amount (gross profit) will be double
ie, rs 100 taken wrongly on other side it effects the double amount to gross profit.
gross profit is increasing because sales returns are taken purchase side
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What will be the effect when return inward is wrongly entered as return outward?a)Gross Profit is increased by Rs. 100b)Gross Profit is decreased by Rs. 100.c)Gross Profit is increased by Rs. 200.d)Gross Profit is decreased by Rs. 200.Correct answer is option 'C'. Can you explain this answer?
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What will be the effect when return inward is wrongly entered as return outward?a)Gross Profit is increased by Rs. 100b)Gross Profit is decreased by Rs. 100.c)Gross Profit is increased by Rs. 200.d)Gross Profit is decreased by Rs. 200.Correct answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about What will be the effect when return inward is wrongly entered as return outward?a)Gross Profit is increased by Rs. 100b)Gross Profit is decreased by Rs. 100.c)Gross Profit is increased by Rs. 200.d)Gross Profit is decreased by Rs. 200.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What will be the effect when return inward is wrongly entered as return outward?a)Gross Profit is increased by Rs. 100b)Gross Profit is decreased by Rs. 100.c)Gross Profit is increased by Rs. 200.d)Gross Profit is decreased by Rs. 200.Correct answer is option 'C'. Can you explain this answer?.
What will be the effect when return inward is wrongly entered as return outward?a)Gross Profit is increased by Rs. 100b)Gross Profit is decreased by Rs. 100.c)Gross Profit is increased by Rs. 200.d)Gross Profit is decreased by Rs. 200.Correct answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about What will be the effect when return inward is wrongly entered as return outward?a)Gross Profit is increased by Rs. 100b)Gross Profit is decreased by Rs. 100.c)Gross Profit is increased by Rs. 200.d)Gross Profit is decreased by Rs. 200.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What will be the effect when return inward is wrongly entered as return outward?a)Gross Profit is increased by Rs. 100b)Gross Profit is decreased by Rs. 100.c)Gross Profit is increased by Rs. 200.d)Gross Profit is decreased by Rs. 200.Correct answer is option 'C'. Can you explain this answer?.
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