On the basis of the information provided on the right a business reported the gross profit for the period as £34,000 and net profit as £14,000. Since then it has been discovered that closing inventory is in fact £280,000. The effect of correcting this error is:

(a) Gross profit as well as net profit remain unchanged
(b) Gross profit decreases by £80,000 and net profit remains unchanged
(c) Gross profit increases by £80,000 and net profit remains unchanged
(d) Gross profit as well as net profit increase by £80,000

Transcribed Image Text:

Opening inventory £354,000 Purchases £712,000 Sales £900,000 Closing inventory £200,000