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