Question

All of the following will cause a decline in a company’s gross profit EXCEPT A : selling products with a lower markup. B : clearance of discontinued inventory. C : increased competition resulting in a lower selling price. D : paying lower prices to its suppliers.

Answer 1

Answer: Option D

Explanation: In simple words, gross profit refers to the amount of revenue that the company is left with after deduction for the expenses that are incurred to make and sell that specific product.

The low pay to supplier means that the company will have a low cost to produce the product which will result in increase in gross profit.

Hence the correct option is D.