Accrual adjustments for gross profit on refreshments Steps:

• Sales revenue = $2000 (receipts from sales, assuming no debtors).
• Total purchases = payments to suppliers $1400 + unpaid bill$75 = $1475.
• Cost of goods sold = total purchases - closing inventory (unsold refreshments) $200 =$1475 - $200 =$1275.
• Profit = sales revenue - cost of goods sold = $2000 -$1275 = $725.

Why B is correct:

• Applies accrual accounting: adds unpaid purchase to expenses (per matching principle) and deducts closing inventory from COGS (per inventory valuation).

Why the others are wrong:

• A and C $800: Ignores unpaid bill accrual, so COGS =$1400 - $200 =$1200; profit = 1200 = $800.

Final answer: B