Which of the Following "Formulas" Is Incorrect

question 48

Multiple Choice

Which of the following "formulas" is incorrect?

• A)Gross profit - operating expenses = income before income tax.
• B)Sales - cost of goods sold = gross profit.
• C)Sales - gross profit = cost of goods sold.
• D)Operating expenses - cost of goods sold = gross profit.

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Definitions:

Entry Barriers

Obstacles that prevent or hinder new competitors from easily entering an industry or area of business.

Total Profit

The financial gain obtained by subtracting total expenses from total revenue generated from sales or operations.

MR

Marginal Revenue, the additional income that an organization earns by selling one more unit of a product or service.

MC

Marginal Cost; the additional cost incurred from producing one more unit of a good or service.