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Why should a company not recognise a profit

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Reference no: EM132958987

Problem 1: Why should a company not recognise a profit when they purchase inventory?

1) Because profit is a function of sales and cost of sales, not purchases

2) Because inventory is always sold at cost

3) Because revenue is equal to cost of sales at point of purchase

4) Because non-direct costs reduce profit on sale to nil.

Reference no: EM132958987

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