The Following Statements Regarding Gross Profit Are True Except

question 40

Multiple Choice

The following statements regarding gross profit are true except:

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

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Definitions:

Original Price

The initial selling price of a good or service before any discounts, deductions, or adjustments are applied.

Debit Memorandum

Decrease in depositor’s balance.

Perpetual Inventory Method

A system of inventory management where adjustments to inventory records are made on a continuous basis as sales and purchases happen.

Merchandise Inventory

The goods a company holds for the purpose of resale to customers.