14. Your store buys ice cream at a cost of $3.00 a half gallon and sells it for

Question

14. Your store buys ice cream at a cost of $3.00 a half gallon and sells it for $10.00 a half gallon. Selling. semeet, and administrative expenses are $2.55 per half gallon. Which of the following statements is correct? A. Your gross profit per half gallon is $7.00. B. Your gross profit per half gallon is $4.45. C. The difference between the selling price and the cost is recorded in the Net D. The difference between the selling price and the cost is recorded in the Gross Profit account Profit account. 15. What is an advantage of using the multistep income statement? A. It is easier to prepare than the single-step income statement B It highlights the components of net income. C. Net income will be higher than net income computed using the single-step income statement. D. Gross profit is not shown as a separate item. Use the following information to answer questions 16 and 17. The following is a listing of some of the balance sheet accounts and all of the income statement accounts for Aldine Inc. as they appear on the company's adjusted trial balance. Accounts Payable Accounts Receivable Inventory Advertising Expense Cost of Goods Sold Delivery Expense Income Tax Expense Insurance Expense Rent Expense S 11,000 12,000 20,200 12,500 93,000 6,100 2,250 1,000 12,400 170,000 10.900 20,500 Sales Revenue Sales Discounts Sales Returns and Allowances 1 16. On Aldine Inc.'s multistep income statement, Gross Profit would be: A. $45,600 B. $76,800 C. $41,750 D. $39,500 17. On Aldine Inc.'s multistep income statement, Income from Operations would be: A. $14,600 B. $13,600 C. $11,350 D. $9,100 E. $15,850

Explanation / Answer

14. Gross Profit = Sales - Cost of Goods sold

Gross Profit = $10-$3

Gross Profit = $7

Selling , general and administrative expenses are not considered in Gross Profit Computation.

Correct Answer A

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