Your store buys ice cream at a cost of $5.75 a half gallon and sells it for $12.
ID: 2579915 • Letter: Y
Question
Your store buys ice cream at a cost of $5.75 a half gallon and sells it for $12.50 a half gallon. Selling, general, and administrative expenses are $2.45 per half gallon. Which of the following statement is correct? a. The different between the selling price and the cost is recorded in the gross profit account. b. Your gross profit per half gallon is $6.75. c. The different between the selling price and the cost is recorded in the Net Profit account. d, Your gross profit per half gallon is $4.30.
Explanation / Answer
Answer is B
Gross profit is not an account rather it is calculation.
Gross Profit = Sell Price - Cost
= 12.50 - 5.75
= 6.75
Therefore all statement other than B are incorrect.
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