QUESTION 1 (20) 1.1 XML Limited presented the Statement of Comprehensive Income below for its most recent financial year. Sales 743 000 Cost of sales 402 000 Gross profit 341 000 Operating expenses 145 000 Income from operations 196 000 Other income 1 100 Other expenses 26 000 Profit before tax 171 100 Income tax 60 000 Net profit 111 100 1.1.1 Explain the difference between sales and other income. (4) 1.1.2 XML Limited would like to earn a large gross profit by selling its products at a much higher price than its cost. Describe two factors that may prevent it from doing so. (2) 1.1.3 Explain how cost of sales, operating expenses and other expenses are different from one another. (3) 1.1.4 Explain why cost of sales, operating expenses, other expenses and income tax are listed separately in the Statement of Comprehensive Income rather than being lumped together as one item. (2) 1.1.5 Explain why the Statement of Comprehensive Income presented above is inadequate to provide a proper interpretation of the financial result of XML Limited for the financial year. (2)