For a Retailer, There Will Be Positive Income from Operations

question 48

Multiple Choice

For a retailer, there will be positive income from operations if:

• A)revenues are greater than cost of goods sold.
• B)revenues are greater than operating expenses.
• C)gross profit is greater than operating expenses.
• D)cost of goods sold is greater than operating expenses.

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Definitions:

Franchise Agreement

A legal, binding contract between a franchisor and franchisee, outlining the terms and conditions for running a franchised business.

Cost Recovery Method

A revenue recognition method where no profit is recognized until the costs of the sold goods or services are fully recovered.

Installment Sales

A method of sale that allows the buyer to make payments over a period of time, while the seller recognizes income as payments are received.

Collectibility

The likelihood or ability of a company to collect payments from customers for goods or services provided, considered when recognizing revenue.