ACCA Knowledge Level Merchandising Income Statement — practice questions

Explore 2 free Merchandising Income Statement questions in ACCA Knowledge Level Financial Accounting. Open each question or exercise to read its content, reference answers and available explanation.

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Merchandising Income Statement questions and exercises with answers

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A merchandiser has net sales of $940 and cost of sales of $340. What is its gross profit?Read the answer and worked solution →A merchandiser reports gross profit of $600 and total operating expenses of $200. What is its net income (profit for the period)?Read the answer and worked solution →

Worked practice questions

A merchandiser has net sales of $940 and cost of sales of $340. What is its gross profit?

$1,280
$340
$600
$940

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Correct answer: C. $600

1. Gross Profit = Net Sales - Cost of Sales. 2. Gross Profit = $940 - $340 = $600. 3. $340 just repeats cost of sales; $1,280 wrongly adds the two figures. 4. $940 ignores cost of sales entirely. _Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §3.2 "Merchandising Income Statement", p.93_

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A merchandiser reports gross profit of $600 and total operating expenses of $200. What is its net income (profit for the period)?

$800
$400
$600
$200

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Correct answer: B. $400

1. Net Income = Gross Profit - Operating Expenses. 2. Net Income = $600 - $200 = $400. 3. $800 wrongly adds the expenses to gross profit. 4. $600 ignores operating expenses; $200 just repeats the expense figure. _Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §3.2 "Merchandising Income Statement", p.93_