Which one of the following statements is true when a company sells inventory costing $800 for $1,400 cash, and operating expenses are $500?
A)There is no change in current assets.
B)Gross profit increases $100.
C)Stockholders' equity increases $100.
D)Net sales increases $2,200.

Question

Quizplus · Accepted Answer

Gross profit is calculated by subtracting the cost of goods sold from the net sales. In this case, the cost of goods sold is $800 and the net sales are $1,400, which results in a gross profit of $600 ($1,400 - $800 = $600). Since operating expenses are $500, the net income will increase by $100 ($600 - $500 = $100). As a result, the gross profit increases by $100.

Which One of the Following Statements Is True When a Company