Sales account was undercast by GH¢ 1,000. When this is corrected, both the gross profit and the net profit would

Sales account was undercast by GH¢ 1,000. When this is corrected, both the gross profit and the net profit would

Answer Details

When the sales account is corrected, the gross profit and the net profit would increase by GH¢1,000. Gross profit is the amount a company earns after subtracting the cost of goods sold from its revenue. If the sales account was undercast by GH¢1,000, this means that the company's revenue was recorded as lower than it actually was. By correcting this, the company's revenue would be higher and its gross profit would increase by the same amount, GH¢1,000. Net profit is the amount a company earns after subtracting all its expenses from its gross profit. If the company's gross profit increases by GH¢1,000, this means that its net profit would also increase by the same amount, GH¢1,000, assuming all other expenses remain the same. In short, correcting the sales account would result in both the gross profit and the net profit increasing by GH¢1,000.