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True/False: Gross profit is a stockholders equity account and is credited when goods are delivered to customers

User Gerard G
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Final answer:

Gross profit is not a stockholders equity account; it is a profitability measure on the income statement, making the statement false.

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 a component of the income statement and is calculated by subtracting the cost of goods sold from net sales. Gross profit is not an equity account but a measure of a company's profitability. Equity accounts, on the other hand, consist of elements such as common stock, additional paid-in capital, retained earnings, and accumulated other comprehensive income, which represent the owners' claims on the company's assets after all liabilities have been subtracted.

User David Choi
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