Compute the Gross Profit Rate When Sales Are $600,000; Net

question 122

Multiple Choice

Compute the gross profit rate when sales are $600,000; net sales are $460,000 and gross profits are $120,000. (Round your answer to the nearest whole percent.)

• A) 26%
• B) 20%
• C) 0.26 to 1
• D) 0.20 to 1

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Definitions:

Indirect Method

A financial reporting approach used to prepare the cash flow statement, where net income is adjusted for non-cash transactions, changes in working capital, and other items.

Cash Dividends

Distributions of a company's earnings to shareholders in the form of cash.

Dividends Payable

A liability recorded when a company declares dividends but has not yet paid them to shareholders.

Cash Payments

Outflows of cash made by a business, including expenses, creditor payments, and other liabilities, during a specific period.