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WAEC Financial Accounting 2016 Question 16

Question 16

Final Accounts of a Sole Trader

The excess of cost of goods sold over net sales is

  1. A.gross profit.
  2. B.gross loss.
  3. C.net profit.
  4. D.net loss.
Show the answer and explanation

Answer: B (gross loss.)

Explanation

If cost of goods sold is more than net sales, the trading account shows a gross loss.