Consider the following financial information provided by a business - HSC - SSCE Business Studies - Question 13 - 2021 - Paper 1

To determine what occurred between Year 1 and Year 2, we can analyze the financial information provided:

• Revenue: Decreased from $100M to$80M.
• Gross Profit: Decreased from $80M to$60M.
• Net Profit: Remained constant at $30M.

Analysis:

• A decrease in revenue (from $100M to$80M) typically leads to a decrease in gross profit, assuming cost of goods remains constant.
• However, gross profit did decrease, indicating that the cost of goods sold may have increased, but it also suggests looking at expenses.
• Notably, the net profit remaining constant means that total expenses - which is calculated by subtracting net profit from gross profit - must have decreased.

Conclusion:

Since net profit is unchanged despite the decrease in gross profit, we can conclude that expenses must have decreased to keep net profit stable. Therefore, the correct answer is:

B. Expenses decreased.