Author Question: Financial statements prepared during the fiscal year for periods of less than twelve months are ... (Read 40 times)

fagboi · **on:** Jul 6, 2018

Financial statements prepared during the fiscal year for periods of less than twelve months are called interim statements.
a. True
b. False
Indicate whether the statement is true or false

Question 2

Discuss the following statement: Gross profit margin should be stable for all firms.

What will be an ideal response?

momtoalll · **Reply #1 on:** Jul 6, 2018

Answer to Question 1

True

Answer to Question 2

It is highly desirable that gross profit margin would be stable for all firms, but it is unlikely that this would occur in all industries. As cost of goods sold increases for a firm, the firm will raise selling prices to maintain a stable gross profit margin; however, in some industries the competition is such that this is not possible. Grocery stores and retailers tend to have stable gross profit margins, but high technology firms tend to have volatile gross profit margins from year to year.