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Concept explainers
Gross Profit: Gross profit is that profit which is computed by deducting Cost of goods sold from the net sales (Sales after deducting Sales Return and allowances, Sales Discounts).
Gross Profit Rate: It is the financial ratio that evaluates the money left out of the total revenues after deducting the cost of goods sold. Thus, it shows the relationship between the gross profit on sales and net sales
Income from operations: Income from operations refers to that income which is the result of deducting operating expenses from the gross profit of the company. It is calculated in as one of the steps of the multi-step income statement
Net Income: Net Income refers to the actual profit of the Company. It is calculated by deducting total expenses from total revenue of the Company.
Single step income statement: A single step income statement refers to the simplest form of the income statement which has only one step for calculating net income, subtract total expense from total revenues. All data is separated in only two parts- Revenues and Expenses
Classified
(a) Gross profit, (b) Gross profit rate, (c) Income from operations and Net Income, (d) Single step income statement, and (e) Inventory in classified balance sheet of the M C Company.
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Chapter 5 Solutions
Financial Accounting
- What is the gross profit?arrow_forwardKelvin enterprises has the following reported amountsarrow_forwardDepartment A had 15,000 units in work in process that were 60% completed as to labor and overhead at the beginning of the period; 45,600 units of direct materials were added during the period; 42,500 units were completed during the period, and 11,000 units were 80% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. The first-in, first-out method is used to cost inventories. The number of equivalent units of production for conversion costs for the period was ____ Units. Need Solutionarrow_forward
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