Question

LO 2.1Which of the following represents the components of the income statement for a manufacturing business?

Sales Revenue – Cost of Goods Sold = gross profit
Service Revenue – Operating Expenses = gross profit
Service Revenue – Cost of Goods Manufactured = gross profit
Sales Revenue – Cost of Goods Manufactured = gross profit

Answer 1

Sales Revenue – Cost of Goods Sold = gross profit

Step-by-step explanation:

In order to determine the income statement components, the following component is shown

Gross profit = Sales revenue - the cost of goods sold

where,

Sales revenue represents the sales of the business organization

And, the cost of goods sold would be

= Opening inventory + Purchase - ending inventory

By deducting the cost of goods sold from the sales revenue the gross profit can arrive