The income statement shows gross profit, which is equal to
A) gross revenues minus returns and allowances.
B) net sales minus cost of goods sold.
C) earnings before taxes minus taxes.
D) operating income minus operating expenses.
E) operating income minus interest.

Question

Quizplus · Accepted Answer

Gross profit is calculated by subtracting the cost of goods sold (COGS) from net sales (gross revenues minus returns and allowances). This is a fundamental measure of the profitability of the products or services a company sells, before accounting for operating expenses, taxes, and other costs.

The Income Statement Shows Gross Profit, Which Is Equal to