Final answer:
The claim that Gross Profit is a stockholders' equity account is false; it is actually an income statement account that indicates profit before operating expenses and other costs. Stockholders' equity accounts are related to shareholder interests and include common stock and retained earnings.
Step-by-step explanation:
- The statement that Gross Profit is a stockholders' equity account and is credited when goods are delivered to customers is false. Gross Profit is actually an income statement account, not a stockholders' equity account.
- Gross Profit is calculated by subtracting the cost of goods sold from sales revenue. It represents the profit a company makes after accounting for the cost of production but before deducting operating expenses, taxes, and other costs.
- Stockholders' equity accounts reflect the ownership interest of shareholders and include items such as common stock, retained earnings, and paid-in capital.
- Dividends, which are a direct payment to shareholders, and capital gains, which come from selling an asset like stock for more than its purchase price, are the ways by which investors can yield a return on their investment.