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Question

While calculating Gross Profit ratio,

A Closing stock is deducted from cost of production sold Correct Answer Incorrect Answer
B Closing stock is added to cost of production sold Correct Answer Incorrect Answer
C Closing stock is ignored Correct Answer Incorrect Answer
D Closing stock can be added or subtracted depending on the firm Correct Answer Incorrect Answer
E None of the above Correct Answer Incorrect Answer

Solution

Gross profit = Revenue – COGS; COGS includes change in inventory i.e. add any opening stock and less closing stock.

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