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Question:
Gross profit for a merchandiser is net sales minus:
a. operating expenses.
b. cost of goods sold.
c. cost of goods available for sale.
d. sales discounts
Answer:
Option b. cost of goods sold.
Explanation:
When a business sells products, its gross profit is the difference between the amount of money it earns from selling those products (net sales) and the cost of producing or purchasing them (cost of goods sold).
So, if you subtract the cost of goods sold from the net sales, you’ll get the gross profit. This doesn’t include other expenses like operating expenses or sales discounts.
Basically, gross profit is how much money a business made from selling its products after taking into account how much it cost to produce or purchase those products.
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