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State true or false with reason. Gross profit depends upon not sales. - Book Keeping and Accountancy

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Question

State true or false with reason.

Gross profit depends upon not sales.

Options
  • True

  • False

Solution

False.

Explanation: 

Gross profit is ascertained by preparing a Trading Account. In this account, all the direct costs incurred are deducted from the net sales (sales less sales return), i.e. revenue, to arrive at gross profit. Hence, it is correct to say that gross profit depends on net sales.

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APPEARS IN

 Micheal Vaz Solution for Class 12 Accounts - Book Keeping and Accountancy (2019 (Latest))
Chapter 12: Analysis of Financial Statements
Exercise | Q: 4 | Page no. 384
 2017-2018 (March) (with solutions)
Question 1.4.4 | 1.00 mark
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State true or false with reason. Gross profit depends upon not sales. Concept: Concept of Financial Statement Analysis.
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