Question

Gross profit/loss is calculated by comparing net sales and_________.

• A. cost of production
• B. cost of sales
• C. cost of goods sold
• D. cost of purchase

Answer 1

The correct option is C cost of goods sold

Gross profit is defined as the profit earned by the business from trading of goods. Trading account included the purchase and sale of traded goods only.

This can be defined as:

Gross Profit = Sales - Cost of good sold