FSA question

[amberpower]

Net revenues 1545
cost of sales (845)
gross profit 700

Changing the estimated useful lives have extended useful lives and reduced cost of sales by 8MM.

So wouldn't the new cost of sales be 837 and new gross profit be 708? The answer is 853 and 692. But if cost of sales are being reduced, then wouldn't the gross profit go up?

 

[cpk123]

remember cost of sales is a negative number.

and -853 < -845

while -845 < -837

you are moving towards 0.

 

[amberpower]

Thanks, I get it now. Total brain fart.

I seriously am going to answer any FSA question on the test the opposite of what I think it should be. Why finance is easy and accounting is horribly hard for me I will never know.

 

[kevin002]

woah..cpk's back!!!! awesome....