Net profit increases when

Question

BlackTom AI · Accepted Answer

The question presents a classic concept about net profit behavior. To begin, we should consider what drives net profit = revenue minus costs. 
Option 1: 'Variable costs increase' — If variable costs rise, net profit would typically decrease unless revenue increases proportionally. This option would generally harm profit, not increase it. It is therefore not a correct mechanism for profit growth. 
Option 2: 'Depreciation is ignored' — Depreciation is a non-cash expense that affects reported profit in accrual accounting. If depreciation were ignored, net profit could appear higher, but that ignores standard accounting practice and would misstate profit; in most contexts, depreciation should be considered, so this option is misleading and not a valid explanation for real profit increase. 
Option 3: 'Fixed costs increase' — Increasing fixed costs raises total costs without automatically driving higher revenue, reducing profit margins unless there is a commensurate jump in sales. This would usually reduce net profit, not increase it. 
Option 4: 'Sales increase while costs remain stable' — When sales rise while costs stay the same, the revenue grows while the cost base does not, expanding gross and net profit. This is the cleanest path to higher net profit since the incremental revenue largely contributes to bottom-line profit after covering any variable costs that may scale with sales. 
In summary, the only option that logically leads to an increase in net profit under standard profit equations is the scenario where sales rise while costs stay flat, as it widens the gap between revenue and total costs. The other options describe situations that either reduce profit or misrepresent accounting treatment, making them incorrect explanations for profit growth.

GBUS4330W01 25 Fall GBUS 4330 Final Exam - Requires Respondus LockDown Browser

Net profit increases when

查看解析

登录即可查看完整答案

类似问题

_____ is the difference between a company’s revenues and all of its expenses.

Another name for "Net Income" is ________.

________ is what remains when you subtract fixed and variable costs and taxes from revenues.

Calculate the net profit for the firm if its total revenues are $123,201 and total expenses are $35,569.

Given this information, calculate the net profit for the business. Sales revenue 106,034 Unearned revenue 2,412 Dividends 5,389 Cost of sales 32,535 Interest revenue 3,395 Operating expenses 11,339 Income tax expense 2,207

Consider the following information for Ball CorpWhat is the Net Profit?

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单

GBUS*4330*W01 25 Fall GBUS 4330 Final Exam - Requires Respondus LockDown Browser

Net profit increases when

查看解析

登录即可查看完整答案

类似问题

_____ is the difference between a company’s revenues and all of its expenses.

Another name for "Net Income" is ________.

________ is what remains when you subtract fixed and variable costs and taxes from revenues.

Calculate the net profit for the firm if its total revenues are $123,201 and total expenses are $35,569.

Given this information, calculate the net profit for the business. Sales revenue 106,034 Unearned revenue 2,412 Dividends 5,389 Cost of sales 32,535 Interest revenue 3,395 Operating expenses 11,339 Income tax expense 2,207

Consider the following information for Ball CorpWhat is the Net Profit?

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单

GBUS4330W01 25 Fall GBUS 4330 Final Exam - Requires Respondus LockDown Browser