Use the following information to answer the given question \(\begin{array}{c|c} & N \\ \hline Sales & 200,000 \\ \text{Opening Stock} & 20,000 \\ purchases ...

Answer Details

To calculate the gross profit, we need to subtract the cost of goods sold (COGS) from the total sales revenue. The formula for gross profit is: Gross Profit = Sales - Cost of Goods Sold We can calculate the COGS by using the following formula: COGS = Opening Stock + Purchases - Closing Stock Let's substitute the given values in the formula: COGS = 20,000 + 140,000 - 10,000 COGS = 150,000 Now we can calculate the gross profit using the first formula: Gross Profit = Sales - COGS Gross Profit = 200,000 - 150,000 Gross Profit = 50,000 Therefore, the gross profit is N50,000. In simple terms, gross profit is the profit a company earns after deducting the cost of goods sold from its total sales revenue. It indicates the profitability of a company's core business operations, without factoring in other expenses such as operating expenses or taxes.