Question

Sales are equal to ____________________.

• A. Cost of goods sold + gross profit
• B. Cost of goods sold - gross profit
• C. Cost of goods sold
• D. None of the above

Answer 1

Answer: (A)

Cost of goods sold + gross profit

Sales is defined as the transfer of goods to third party against the monetary value. Sales includes cash and credit sales both.

Cost of goods sold is the economic value of the product which are actually sold.

Gross profit is the profit that company makes after deducting the direct cost of the product from the sales.

This can be formulated as:

Sales- Gross Profit= Cost of good sold or

Cost of good sold+Gross Profit=Sales