O-LevelAccountingAnalysis and interpretation7707/12 · Oct/Nov 2018 · Q281 Mark

A business provided the following information about its percentage of gross profit to sales. Year 1 40% Year 2 38% Year 3 35% What could explain the changes in the percentage of gross profit to sales?

ACost of sales is decreasing.

BExpenses are decreasing.

CQuantity of goods sold is decreasing.

DSelling price is decreasing.

✓ Correct answer

D: Selling price is decreasing.

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Topic: Analysis and interpretation, O-Level Accounting (syllabus 7707). Multiple choice, 1 mark.
Source: O-Level Accounting, Oct/Nov 2018 Paper 1 Variant 2, question 28.

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