Gross profit is defined as the remainder of sales revenue after deducting trading expenses. By trading expenses, we mean the direct expenses that are incurred in relation to the primary business activity of a business’s model. These are also called the cost of goods sold.
When we prepare an income statement the gross profit appears in the upper section of the income statement which is also called a trading account. Normally the income statement contains two parts - first, the trading section and seconds the operating section. That is why it is also called trading and profit and loss account.
Gross Profit = Sales Revenue – Cost of goods sold
A toy store owner, who purchases toys for $500 and then resell them for $700 against cash. At this point the gross profit will be as follows:
Gross Profit = $700 - $500 = $200
The comparative financial statements of Marshall Inc. are as follows.
In 2018, the Westgate Construction Company entered into a contract to
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A fire destroyed a warehouse of the Goren Group, Inc.,
XYZ is a calendar-year corporation that began business on January
During the current year, merchandise is sold for $31,
The beginning inventory at Midnight Supplies and data on purchases and sales
The comparative financial statements of Stargel Inc. are as follows.
On February 1, 2018, Arrow Construction Company entered into a
Citation Builders, Inc., builds office buildings and single-family
