The Following Statements Regarding Gross Profit Are True Except

question 32

Multiple Choice

The following statements regarding gross profit are true except:

• A) Gross profit less other operating expenses equals income from operations.
• B) Gross profit is not calculated on the multiple-step income statement.
• C) Gross profit equals net sales less cost of goods sold.
• D) Gross profit is also called gross margin.
• E) Gross profit must cover all operating expenses to yield a return for the owner of the business.

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Definitions:

Real GDP

The measure of the value of all final goods and services produced within a country adjusted for inflation or deflation.

DSO

Stands for Days Sales Outstanding, a measure used by companies to assess the average number of days it takes to collect payment after a sale has been made.

Bad Debt

Money owed to a company that is unlikely to be paid by the debtor, often considered a loss for the company.

Credit Policy

The guidelines a company follows to determine credit terms for customers, including payment terms, credit limits, and how to handle late payments.