9 lines
506 B
Markdown
9 lines
506 B
Markdown
**Gross profit = Revenue − Cost of Sales only** = $500,000 − $320,000 = **$180,000 → B**
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The trick here is that **Other Income is not included in gross profit**. It gets added _after_ gross profit is calculated. This is a common exam trap — they give you extra numbers to see if you'll throw them in too early.
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The order on the income statement goes:
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1. Revenue − Cost of Sales = **Gross Profit**
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2. Gross Profit + Other Income = subtotal
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3. Then subtract general expenses to get to net profit |