Which of the following "formulas" is incorrect?
A)Gross profit - operating expenses = profit before income tax.
B)Net sales - cost of goods sold = gross profit.
C)Net sales - gross profit = cost of goods sold.
D)Operating expenses - cost of goods sold = gross profit.

Question

Quizplus · Accepted Answer

The correct formula is "gross profit = net sales - cost of goods sold". Therefore, to calculate the operating expenses, the formula should be "gross profit - operating expenses = profit before income tax". Subtracting cost of goods sold from operating expenses would not make sense in calculating gross profit.

Which of the Following "Formulas" Is Incorrect