Gross profit on sales is calculated as
A)net sales minus operating expenses.
B)sales minus sales returns and allowances.
C)net sales minus cost of goods sold .
D)net sales plus cost of goods sold.

Question

Quizplus · Accepted Answer

Gross profit on sales is calculated as net sales minus cost of goods sold. This represents the profit generated by a company's core business operations, after deducting the direct costs of producing goods or services. Option A is incorrect as it subtracts operating expenses instead of cost of goods sold. Option B is incorrect as it subtracts sales returns and allowances instead of cost of goods sold. Option D is incorrect as it adds cost of goods sold instead of deducting it from net sales.

Gross Profit on Sales Is Calculated as