Meg Malloy is running an income statement on her QuickBooks computer accounting program. Which of the following accounts will be used to calculate gross profit?
A) Revenues, net sales, depreciation, and operating expenses
B) Revenues, general expenses
C) Revenues, cost of goods sold, tax expenses, net income before taxes
D) Revenues, cost of goods sold

Question

Quizplus · Accepted Answer

Gross profit is calculated using the formula:
Gross profit = Revenues - Cost of goods sold 
Therefore, only the accounts Revenues and Cost of goods sold are needed to calculate gross profit. Choice (A) includes depreciation and operating expenses which are not used to calculate gross profit. Choice (B) only includes general expenses which are also not used to calculate gross profit. Choice (C) includes tax expenses and net income before taxes which are not relevant to calculating gross profit.

Meg Malloy Is Running an Income Statement on Her QuickBooks