Answer the following statements true (T) or false (F)

Question

1. S & C Corporation has $17,000 cash, $8,000 equipment, and $3,000 inventory. The current assets section of the balance sheet would total $20,000.
2. Gross profit percentage is computed by dividing sales revenue by cost of goods sold.
3. The net income percentage is computed by dividing net income by gross profit.
4. If a company has $115,000 sales revenue, $65,000 in gross profit, and $12,000 in net income, the net income percentage would be approximately 57%.
5. If a company had sales revenue of $56,000, gross profit of $33,000, and net income of $8,000, the gross profit percentage would be approximately 59%.

Answer 1

1. TRUE
Explanation: cash $17,000 + inventory $3,000 = $20,000
2. FALSE
3. FALSE
4. FALSE
Explanation: net income percentage is net income/sales revenue, so $12,000/$115,000 = 10.4%
5. TRUE
Explanation: gross profit percentage = gross profit/sales revenue; $33,000/$56,000 = 59% (rounded).