A Merchandiser Will Earn an Operating Income of Exactly $0

question 131

Multiple Choice

A merchandiser will earn an operating income of exactly $0 when

• A)gross margin equals operating expenses.
• B)net sales equals cost of goods sold.
• C)cost of goods sold equals gross margin.
• D)operating expenses equal net sales

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Definitions:

Quasi-Endowment Funds

Funds set aside by an organization, often a nonprofit or educational institution, to function like an endowment but which can be accessed under certain conditions, as determined by its governing body.

Operating Reserves

Financial assets set aside by an organization to cover unexpected shortfalls or emergencies, ensuring financial stability and operational continuity.

Permanently Restricted Endowment

A type of endowment fund that a donor restricts in perpetuity; the principal cannot be spent, but the investment earnings can be used for designated purposes.

Financial Assets

Assets that derive value because of a contractual claim, such as stocks, bonds, and bank deposits.