Reference no: EM132585523

XML Limited presented the Statement of Comprehensive Income below for its most recent financial year.

R

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

Question 1: Explain the difference between "sales" and "other income".

Question 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

Question 3: Explain how cost of sales, operating expenses and other expenses are different from one another.

Question 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.

Question 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.