Exam 2

Question 1

Gross profit equation

Answer 1

Gross profit= Net sales - COGS

Question 2

Net sales equation

Answer 2

Net sales= sales - (sales returns & allowance)

Question 3

Operating income equation

Answer 3

Gross profit- operating expense

Question 4

Net income equation

Answer 4

Operating income - interest expense= _____ x 30%=______

First blank - second blank= net income

Question 5

Ending accounts receivable equation

Answer 5

A/R beginning + net credit sales - cash collection - write offs