Use the Information Below to Answer the Following Questions -If the Rate of Income Tax Were Raised to 40%,what

Multiple Choice

Use the information below to answer the following questions. Each question is to be considered separately.
The income statement of Berrima Barbed Wire Ltd is:
$\begin{array}{lr} & \$ \\ \text { Revenue } & 22,000 \\ \text { Expense } & \underline{12,000} \\ \text { Profit before income tax } & 10,000 \\ \text { Income tax expense }(30 \%) & \underline{3,000} \\ \text { Net profit } & \underline{7,000}\end{array}$
-If the rate of income tax were raised to 40%,what would be the effect on net profit?

A) It would increase by $700.
B) It would decrease by $700.
C) It would increase by $1000.
D) It would decrease by $1000.