Which of the following statements regarding gross profit is not true? Multiple Choice Gross profit equals net sales less cost of goods sold. Gross profit is also called gross margin. Gross profit less other operating expenses equals income from operations. Gross profit must cover all operating expenses to yield a return for the owner (s) of the business. Gross profit is not calculated on the multiple-step income statement.

Question

Business

Pierce Pham

16 September, 15:43

Which of the following statements regarding gross profit is not true? Multiple Choice Gross profit equals net sales less cost of goods sold. Gross profit is also called gross margin. Gross profit less other operating expenses equals income from operations. Gross profit must cover all operating expenses to yield a return for the owner (s) of the business. Gross profit is not calculated on the multiple-step income statement.

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Randy Howe · Answer 1

Gross profit is not calculated on the multiple-step income statement.

Explanation:

Multi-step income statements is a financial document that categorizes revenue, expenditures, and income into different subtitles. The subtitles follow each other in a logical order. The total for each subtitle is indicated as the last line item.

Categorization makes it easier for users to follow and understand each line in the income statement. A multi-step income shows the income or expense associated with each of a business's core activity.

Gross profit is obtained by subtracting direct expenses from the net revenue. Direct expenses are the costs of goods sold. Gross profit is income before adjusting for operating expenses. It is usually indicated in the multi-step income statement.