NABTEB Book Keeping 2015 Objective — Question 15

Question 15 of 40 from the National Business and Technical Examinations Board (NABTEB) Book Keeping 2015 Objective paper, with the correct answer and a full explanation.

When returns inwards are overstated, the

A. net sales would be overstated
B. net sales would be understatedCorrect
C. cost of goods sold would be understated
D. cost of goods sold would be overstated

Explanation

Since net sales = Sales - Returns inwards, an overstatement of returns inwards (subtracting too much) results in net sales being understated.

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