Which of the Following Statements About Gross Profit Is Not

question 34

Multiple Choice

Which of the following statements about gross profit is not true?

• A)Gross profit is equal to sales less cost of sales
• B)An entity cannot be sustainable unless the gross profit is positive
• C)Gross profit is applicable to manufacturing and retail businesses
• D)Gross profit is equal to total income minus total expenses

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Definitions:

Cost Depletion

An accounting method used to allocate the cost of extracting natural resources, such as minerals or timber, over the period of extraction.

Permanent Difference

Differences between accounting income and taxable income that will not reverse in future periods.

Book Income

The income reported by a company according to accounting principles, often different from taxable income due to timing and valuation differences.

Taxable Income

The amount of income that is used to calculate an individual or a company's income tax liabilities.