Which of the Following Transactions Does Not Affect Gross Profit

question 110

Multiple Choice

Which of the following transactions does not affect gross profit?

• A)A customer returning merchandise that was sold for a profit.
• B)The collection of cash on an account receivable which was paid for by the customer within the discount period.
• C)The journal entry to record bad debt expense.
• D)Selling inventory for less than its cost.

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Definitions:

Depreciable Asset

An asset that loses value over time due to wear and tear or obsolescence and can have its cost spread out over its useful life for accounting purposes.

Proceeds

The amount of money received from a transaction, sale, or event.

Gain

The increase in the economic value or benefit that an entity receives, usually from the sale of assets or from other transactions exceeding the costs or expenses associated with it.

Straight-Line Method

A method of calculating depreciation of an asset which assumes the asset will lose an equal amount of value each year over its useful life.