Question

6. A company's gross profit rate is computed by:

a. dividing net sales by gross profit.

b. subtracting gross profit from net sales.

c.subtracting cost of goods sold from net sales.

d. dividing gross profit by net sales.

7. A merchandiser will earn a gross profit of exactly $0 when?

a. net sales equals cost of goods sold

b. cost of goods sold equals total operating expenses

c. total operating expenses equal net sales

d. gross profit equals total operating expenses

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

a. net sales equals cost of goods sold

b. cost of goods sold equals gross profit

c. total operating expenses equal net sales

d. gross profit equals total operating expenses

Answer 1

6)

Answer- d; dividing gross profit by net sales.

Gross profit = net sales - cost of goods sold

Gross profit rate = gross profit/ net sales

7)

Answer - a; net sales equals cost of goods sold

Gross profit = net sales - cost of goods sold

When both net sales and cost of goods sold are equal then gross profit is 0.

8)

Answer - d; gross profit equals total operating expenses

Operating income = gross profit - operating expenses

When both gross profit and operating expenses are equal then operating income is 0.