Assume That Sales Are Increasing Faster Than the Rate of Inflation

question 108

Multiple Choice

Assume that sales are increasing faster than the rate of inflation, and that the company's gross profit rate is rising. Of the following, the most logical conclusion is that:

• A) The company's cost of purchasing merchandise is rising rapidly.
• B) Operating expenses are falling.
• C) Demand for the company's products is very strong.
• D) The company has achieved an increase in sales volume by reducing its sales prices.

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Definitions:

Profit (Loss)

The financial gain or loss resulting from revenue generated minus the expenses of operating the business.

Ounce

A unit of weight commonly used in the United States and the United Kingdom, equal to 1/16 of a pound or approximately 28.35 grams.

Futures Contract

A legal agreement to buy or sell a particular commodity or asset at a predetermined price at a specified time in the future.

Pounds

The unit of currency used in the United Kingdom, also known as the British pound sterling (GBP).