Purrfect Pets announces that its gross profit rose 5% and its net income fell.Which of the following statements is true?

Question

Quizplus · Accepted Answer

If the gross profit rose by 5% and the net income fell, it means that the expenses increased more than the rise in gross profit. Therefore, option B is the correct answer. Option A is incorrect because net income is not solely determined by gross profit, as there are other factors such as expenses and taxes that affect it. Option C is unlikely because if other expenses fell, the net income should have increased rather than decreased. Option D is not necessarily true as sales revenue might have remained the same or even increased, but the increase in expenses led to a decrease in net income.

Purrfect Pets Announces That Its Gross Profit Rose 5% and Its