Gross profit does not appear

Question

Quizplus · Accepted Answer

Gross profit is a term used in multiple-step income statements, which separates operating revenues and expenses from non-operating items such as gains, losses, and interest. Single-step income statements do not have separate categories for operating and non-operating items, and gross profit is not calculated. Gross profit is relevant to analyzing the operations of a merchandiser, as it shows the profit earned from the sale of goods after deducting the cost of goods sold. Even if a company uses the periodic inventory system, gross profit can still be calculated by subtracting the cost of goods sold from net sales. Therefore, option B is the correct choice.

Gross Profit Does Not Appear