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Q: Merchandising and service company have gross profit?
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1 In comparing the accounts of a merchandising company with those of a service company what additional accounts would the merchandising company likely use assuming it employs a perpetual inventory?

Cost of goods sold and Gross profit


Is the measure of net income for a merchandising company conceptually the same for a service company?

Well if you look at it by the basics you will see both use the same Net income = revenue - expenses. However the income statement for the service company subtracts the operating expenses from the revenues to arrive at net income. The merchandising company subtracts the cost of merchandising from the revenue to arrive at gross profit. It then subtracts all other operating expenses to arrive at net income.


Is the measurement of net income for a merchandising company conceptually the same as for a service company?

Well if you look at it by the basics you will see both use the same Net income = revenue - expenses. However the income statement for the service company subtracts the operating expenses from the revenues to arrive at net income. The merchandising company subtracts the cost of merchandising from the revenue to arrive at gross profit. It then subtracts all other operating expenses to arrive at net income.


Why does the gross profit increase when the value of closing stock increases?

It doesn't. Gross profit is the of a company is the profit it receives for the product or service produced after the cost of that service or product. It does not take into account any other expenses incurred by the company. Net profit takes this into consideration. Price of stock can increase or decrease the available money for a company to invest or use for generating income.


Candy Company had sales of 240000 and cost of goods sold of 108000 What is the gross profit margin?

Gross profit = sales - cost of good sold Gross profit margin = gross profit / sales *100 Gross profit = 240000- 108000 = 132000 Gross profit margin = 132000/240000 *100 Gross profit margin = 55%


What causes the difference between actual and budgeted gross profit?

Budgeted gross profit is the expected profit amount before the start of production run while actual gross profit is the actual amount of profit which company earns after the production and sales of product.


How do you calculate GP Gross Profit when the revenue is less than the costs?

If revenue is less than costs, the gross profit is negative -- it is not a profitable company.


If gross profit ratio is the same for two years what is the financial position of this company?

If the gross profit ratio is the same for two years, the financial position of the company is stable. It means the company is at the same break even point as the year before, but does not constitute growth of profit.


What does gross profit ration tell you about a company's performance during the Year?

The gross profit ration tells you a lot about a company's performance during the year. You are able to tell the amount of goods that have been sold and when you less the profits you will get the net profit.


What is the difference of gross profit and gross margin?

Gross profit is the amount of profit in dollars...gross margin is the % profit to expenses


What is the step to increase gross profit of a company?

There are various steps to increase the gross profit. You have to increase the efficiency of the workers. The waste produced must be recycled to save money.


If a shoe company had sales of 24000 and cost of goods sold of 10800 What is the gross profit margin?

The Gross Profit is the amount in excess of the cost of goods sold. To get this we simply take sales $24,000 and subtract $10,800 to find a gross profit of $13,200