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Friday, February 19, 2021

Zeever Smart Watches- Calculation of gross profit and net profit

 

Zeever Smart Watches( ZSW)

Topic/s covered:  Income Statement

·       Cost of goods sold

·       Calculation of gross profit

·        Calculation of net profit

Calculation of gross profit and net profit

 

Zeever Smart Watches( ZSW), owned by  Mr Zeever sells smart watches. ZSW is famous for  its customer service and  quality assurance. Apart from  the physical shop, ZSW also accepts orders online. The following  financial information is  taken from the  books of ZSW for the year ended 31 March 2020.

Sales revenue

$ 12,000

Opening stock

$ 2,500

Closing stock

$ 3,200

Purchases

$6,000

Expenses

$ 1,200

 

Questions:

a)      Define the term ‘cost of goods sold’

 [2 marks]

b)      Using the above financial information, calculate gross profit, and net profit.

[4 marks]

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