During the current year, merchandise is sold for $3,200,000. The cost of the goods sold is $2,688,000.
1. What is the amount of the gross profit?
Answer: $512,000
Cash sales plus sales on account less cost of goods sold is equal to gross profit.
2. Compute the gross profit percent.
Answer: 16 %
Divide the gross profit by sales and multiply by 100
3. Which of the following is true, based on the above information?
Answer: The company may have a net income or net loss depending upon the amount of operating expenses.
Consider all the things that are deducted from revenue to obtain net income.
