Multiple choice

If the closing stock is zero, it means

  1. loss has been incurred

  2. profit has been earned

  3. there may be loss or profit

  4. none of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Zero closing stock simply means all goods have been sold or used. Profit or loss depends on whether goods were sold above or below cost. A business can have zero closing stock and still be profitable (if margins were good) or unprofitable (if sold at loss).

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