BUISENESS MANAGEMENT
MERCHANDISING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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It does not require exact cost amounts of individual units.
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It replaces the need to do physical inventory counts.
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It only requires an estimate rather than an exact calculation.
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It artificially reduces the value of inventory for tax purposes.
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Detailed explanation-1: -How is the gross profit method different from the other three primary methods? It does not require exact cost amounts of individual units. It replaces the need to do physical inventory counts. It only requires an estimate rather than an exact calculation.
Detailed explanation-2: -Gross profit method: Uses the expected gross profit percentage of total sales to find the cost of goods sold. Retail method : Uses the cost-to-retail percentage of total sales to find the cost of goods sold.
Detailed explanation-3: -Gross profit shows how much money your business makes after meeting some costs. Net profit shows how much you make after meeting all costs. A business’s gross profit is the money it has left after paying for the goods and services it sold.
Detailed explanation-4: -In short, gross profit is your revenue without subtracting your manufacturing or production expenses, while net profit is your gross profit minus the cost of all business operations and non-operations. Your net profit is going to be a much more realistic representation of your company’s profits.