If Net Sales are 500,000 and COGS is 320,000, what is Gross Profit?

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Prepare for the WGU ACCT2350 Intro to Business Accounting Exam. Practice with multiple choice questions and detailed solutions to sharpen your accounting skills. Master your exam with confidence!

Multiple Choice

If Net Sales are 500,000 and COGS is 320,000, what is Gross Profit?

Explanation:
Gross profit is the amount left from net sales after subtracting the cost of goods sold. With net sales of 500,000 and COGS of 320,000, gross profit is 180,000. This shows the earnings from core selling activities before operating expenses and other costs. The other numbers come from misapplying the calculation: 320,000 is the COGS itself, 500,000 is net sales, and 820,000 would result from adding the two amounts, which isn’t how gross profit is determined.

Gross profit is the amount left from net sales after subtracting the cost of goods sold. With net sales of 500,000 and COGS of 320,000, gross profit is 180,000. This shows the earnings from core selling activities before operating expenses and other costs. The other numbers come from misapplying the calculation: 320,000 is the COGS itself, 500,000 is net sales, and 820,000 would result from adding the two amounts, which isn’t how gross profit is determined.

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