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If sales remain constant and cost of goods sold increases, what happens to gross profit? Does it increase, decrease, or remain the same and by

  1. If sales remain constant and cost of goods sold increases, what happens to gross profit? Does it increase, decrease, or remain the same and by what percentage?

Example: 2015 2014

Sales $100,000 $100,000

Cost of goods sold (60,000) (50,000)

Gross profit $ 40,000 $ 50,000

  1. For the following scenarios, indicate what year revenue would be recognized under accrual-basis accounting.
  2. A theater company sells tickets for cash in 2019 for a performance that takes place in 2020.
  3. In 2016, a manufacturing company collects cash from a customer for goods it sold and delivered to the customer in 2015.
  4. In 2017, a consulting company enters into a contract with a customer and provides consulting services to the customer in 2018.
  5. In 2018, a hospital collects cash from a customer for services they provided to the customer in 2017.
  6. A department store sells (and delivers) merchandise on credit to a customer in November 2019. The customer pays for the merchandise in January 2020.
  7. In late 2018, a toy company manufactures toys which it sells (and delivers) to its customer in 2019.

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