What is the term used for the profit on a sale before any operating expenses have been deducted? a. Net Income b. Net Profit c. Gross Profit d. Gain on Sale e. All of the above

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Answer 1

Textbook Question

Chapter 12, Problem 1QY

What is the term used for the profit on a sale before any operating expenses have been deducted?

a. Net Income
b. Net Profit
c. Gross Profit
d. Gain on Sale
e. All of the above

Expert Solution & Answer

To determine

Find the correct option that indicates the correct term for the given explanation.

Answer to Problem 1QY

The correct answer is option (c).

Explanation of Solution

Gross profit: Gross profit is the amount of revenue earned from goods sold over the costs incurred for the goods sold.

Formula to compute gross profit:

Gross profit = Net sales – Cost of goods sold

Justification for correct answer: Gross profit is the difference between net sales and cost of goods sold. The amount of cost of merchandise sold during a certain period is referred to as cost of goods sold. Cost of goods sold does not include any operating expenses. So, gross profit is the revenue generated from sales over the cost of goods sold, before any operating expenses are incurred. Hence, option (c) is correct.

Justification for incorrect answers:

Option (a) is incorrect because net income is the difference between total revenues and total expenses of a business.
Option (b) is incorrect because net income or net profit is the difference between total revenues and total expenses of a business.
Option (d) is incorrect because gain on sale is the amount realized on sale transaction, when the sale proceeds is more than the book value of the asset on the date of sale.
Option (e) is incorrect because option (c) is the correct answer and the phrase ‘all of the above’ is incorrect.

Conclusion

Therefore, option (c) is correct answer.

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On November 1, 20Y9, Lexi Martin established an interior decorating business, Heritage Designs. During the month, Lexi completed the following transactions related to the business: Nov. 1 Lexi transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, $50,000. 1 Paid rent for period of November 1 to end of month, $4,000. 6 Purchased office equipment on account, $15,000. 8 Purchased a truck for $38,500 paying $5,000 cash and giving a note payable for the remainder. 10 Purchased supplies for cash, $1,750. 12 Received cash for job completed, $11,500. 15 Paid annual premiums on property and casualty insurance, $2,400. 23 Recorded jobs completed on account and sent invoices to customers, $22,300. 24 Received an invoice for truck expenses, to be paid in November, $1,250. Enter the following transactions on Page 2 of the two-column journal: Nov. 29 Paid utilities expense, $4,500. 29…

Accounting 89

Answer 2

Textbook Question

Chapter 12, Problem 1QY

What is the term used for the profit on a sale before any operating expenses have been deducted?

a. Net Income
b. Net Profit
c. Gross Profit
d. Gain on Sale
e. All of the above

Expert Solution & Answer

To determine

Find the correct option that indicates the correct term for the given explanation.

Answer to Problem 1QY

The correct answer is option (c).

Explanation of Solution

Gross profit: Gross profit is the amount of revenue earned from goods sold over the costs incurred for the goods sold.

Formula to compute gross profit:

Gross profit = Net sales – Cost of goods sold

Justification for correct answer: Gross profit is the difference between net sales and cost of goods sold. The amount of cost of merchandise sold during a certain period is referred to as cost of goods sold. Cost of goods sold does not include any operating expenses. So, gross profit is the revenue generated from sales over the cost of goods sold, before any operating expenses are incurred. Hence, option (c) is correct.

Justification for incorrect answers:

Option (a) is incorrect because net income is the difference between total revenues and total expenses of a business.
Option (b) is incorrect because net income or net profit is the difference between total revenues and total expenses of a business.
Option (d) is incorrect because gain on sale is the amount realized on sale transaction, when the sale proceeds is more than the book value of the asset on the date of sale.
Option (e) is incorrect because option (c) is the correct answer and the phrase ‘all of the above’ is incorrect.

Conclusion

Therefore, option (c) is correct answer.

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Answer 3

Textbook Question

Chapter 12, Problem 1QY

What is the term used for the profit on a sale before any operating expenses have been deducted?

a. Net Income
b. Net Profit
c. Gross Profit
d. Gain on Sale
e. All of the above

Expert Solution & Answer

To determine

Find the correct option that indicates the correct term for the given explanation.

Answer to Problem 1QY

The correct answer is option (c).

Explanation of Solution

Gross profit: Gross profit is the amount of revenue earned from goods sold over the costs incurred for the goods sold.

Formula to compute gross profit:

Gross profit = Net sales – Cost of goods sold

Justification for correct answer: Gross profit is the difference between net sales and cost of goods sold. The amount of cost of merchandise sold during a certain period is referred to as cost of goods sold. Cost of goods sold does not include any operating expenses. So, gross profit is the revenue generated from sales over the cost of goods sold, before any operating expenses are incurred. Hence, option (c) is correct.

Justification for incorrect answers:

Option (a) is incorrect because net income is the difference between total revenues and total expenses of a business.
Option (b) is incorrect because net income or net profit is the difference between total revenues and total expenses of a business.
Option (d) is incorrect because gain on sale is the amount realized on sale transaction, when the sale proceeds is more than the book value of the asset on the date of sale.
Option (e) is incorrect because option (c) is the correct answer and the phrase ‘all of the above’ is incorrect.

Conclusion

Therefore, option (c) is correct answer.

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Answer 4

Textbook Question

Chapter 12, Problem 1QY

What is the term used for the profit on a sale before any operating expenses have been deducted?

a. Net Income
b. Net Profit
c. Gross Profit
d. Gain on Sale
e. All of the above

Expert Solution & Answer

To determine

Find the correct option that indicates the correct term for the given explanation.

Answer to Problem 1QY

The correct answer is option (c).

Explanation of Solution

Gross profit: Gross profit is the amount of revenue earned from goods sold over the costs incurred for the goods sold.

Formula to compute gross profit:

Gross profit = Net sales – Cost of goods sold

Justification for correct answer: Gross profit is the difference between net sales and cost of goods sold. The amount of cost of merchandise sold during a certain period is referred to as cost of goods sold. Cost of goods sold does not include any operating expenses. So, gross profit is the revenue generated from sales over the cost of goods sold, before any operating expenses are incurred. Hence, option (c) is correct.

Justification for incorrect answers:

Option (a) is incorrect because net income is the difference between total revenues and total expenses of a business.
Option (b) is incorrect because net income or net profit is the difference between total revenues and total expenses of a business.
Option (d) is incorrect because gain on sale is the amount realized on sale transaction, when the sale proceeds is more than the book value of the asset on the date of sale.
Option (e) is incorrect because option (c) is the correct answer and the phrase ‘all of the above’ is incorrect.

Conclusion

Therefore, option (c) is correct answer.

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Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

Expert Solution & Answer

To determine

Find the correct option that indicates the correct term for the given explanation.

Answer to Problem 1QY

The correct answer is option (c).

Explanation of Solution

Gross profit: Gross profit is the amount of revenue earned from goods sold over the costs incurred for the goods sold.

Formula to compute gross profit:

Gross profit = Net sales – Cost of goods sold

Justification for correct answer: Gross profit is the difference between net sales and cost of goods sold. The amount of cost of merchandise sold during a certain period is referred to as cost of goods sold. Cost of goods sold does not include any operating expenses. So, gross profit is the revenue generated from sales over the cost of goods sold, before any operating expenses are incurred. Hence, option (c) is correct.

Justification for incorrect answers:

Option (a) is incorrect because net income is the difference between total revenues and total expenses of a business.
Option (b) is incorrect because net income or net profit is the difference between total revenues and total expenses of a business.
Option (d) is incorrect because gain on sale is the amount realized on sale transaction, when the sale proceeds is more than the book value of the asset on the date of sale.
Option (e) is incorrect because option (c) is the correct answer and the phrase ‘all of the above’ is incorrect.

Conclusion

Therefore, option (c) is correct answer.

Answer 8

Expert Solution & Answer

To determine

Find the correct option that indicates the correct term for the given explanation.

Answer to Problem 1QY

The correct answer is option (c).

Explanation of Solution

Gross profit: Gross profit is the amount of revenue earned from goods sold over the costs incurred for the goods sold.

Formula to compute gross profit:

Gross profit = Net sales – Cost of goods sold

Justification for correct answer: Gross profit is the difference between net sales and cost of goods sold. The amount of cost of merchandise sold during a certain period is referred to as cost of goods sold. Cost of goods sold does not include any operating expenses. So, gross profit is the revenue generated from sales over the cost of goods sold, before any operating expenses are incurred. Hence, option (c) is correct.

Justification for incorrect answers:

Option (a) is incorrect because net income is the difference between total revenues and total expenses of a business.
Option (b) is incorrect because net income or net profit is the difference between total revenues and total expenses of a business.
Option (d) is incorrect because gain on sale is the amount realized on sale transaction, when the sale proceeds is more than the book value of the asset on the date of sale.
Option (e) is incorrect because option (c) is the correct answer and the phrase ‘all of the above’ is incorrect.

Conclusion

Therefore, option (c) is correct answer.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

To determine

Find the correct option that indicates the correct term for the given explanation.

Answer 12

Answer to Problem 1QY

The correct answer is option (c).

Answer 13

Explanation of Solution

Gross profit: Gross profit is the amount of revenue earned from goods sold over the costs incurred for the goods sold.

Formula to compute gross profit:

Gross profit = Net sales – Cost of goods sold

Justification for correct answer: Gross profit is the difference between net sales and cost of goods sold. The amount of cost of merchandise sold during a certain period is referred to as cost of goods sold. Cost of goods sold does not include any operating expenses. So, gross profit is the revenue generated from sales over the cost of goods sold, before any operating expenses are incurred. Hence, option (c) is correct.

Justification for incorrect answers:

Option (a) is incorrect because net income is the difference between total revenues and total expenses of a business.
Option (b) is incorrect because net income or net profit is the difference between total revenues and total expenses of a business.
Option (d) is incorrect because gain on sale is the amount realized on sale transaction, when the sale proceeds is more than the book value of the asset on the date of sale.
Option (e) is incorrect because option (c) is the correct answer and the phrase ‘all of the above’ is incorrect.

Answer 14

Conclusion

Therefore, option (c) is correct answer.

Answer 15

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What is the term used for the profit on a sale before any operating expenses have been deducted? a. Net Income b. Net Profit c. Gross Profit d. Gain on Sale e. All of the above

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