Question

Blog Inc. has sales of $50,000, cost of goods sold of $30,000, and selling expenses of $5,000. Its gross profit is ______.

1) 25,000
2) 30,000
3) 20,000
4) 15,000

Answer 1

The gross profit of Blog Inc. is calculated by subtracting the cost of goods sold ($30,000) from sales ($50,000), which results in 3) $20,000.

Step-by-step explanation:

The question involves calculating the gross profit for Blog Inc., which is a key concept in both accounting and business. To find the gross profit, we subtract the cost of goods sold from the sales. Blog Inc. has sales of $50,000 and cost of goods sold of $30,000. Therefore, the gross profit calculation would be $50,000 (sales) - $30,000 (cost of goods sold) = $20,000. The selling expenses are not considered in the gross profit calculation, as these are operating expenses that are deducted afterwards to determine operating profit. Thus, the correct answer is $3) $20,000.