Reference no: EM132567945

ABC presented the statement of comprehensive income below for the latest financial year.

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: ABC would love to earn large pross profit by selling its products at a much higher price than its cost. Describe two factors that may prevent if from doing so.

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

Question 4: Explain why cost of sales, operating expenses and 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 comrehensive income presented above is inadequate to provide a proper interpretation of the financial results of ABC for the financial year.