Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Net Sales

Financial Accounting

4. Merchandising Operations

Net Sales

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Multiple Choice

With respect to returns, which one of the following statements is accurate regarding the calculation of net sales?

Net sales are calculated by subtracting only sales discounts from gross sales.

Net sales are calculated by adding sales returns to gross sales.

Sales returns have no effect on the calculation of net sales.

Net sales are calculated by subtracting sales returns and allowances from gross sales.

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Verified step by step guidance

Understand the concept of net sales: Net sales represent the revenue generated from sales after accounting for deductions such as sales returns, allowances, and discounts.

Identify the components involved in the calculation: Gross sales, sales returns, allowances, and sales discounts are the key elements that affect net sales.

Recognize the formula for net sales: Net sales = Gross Sales - Sales Returns - Sales Allowances - Sales Discounts.

Clarify the role of sales returns and allowances: Sales returns refer to goods returned by customers, while allowances are reductions in price due to issues like damaged goods. Both reduce the gross sales figure.

Apply the formula conceptually: To calculate net sales, subtract the total of sales returns, allowances, and discounts from the gross sales figure. This ensures the net sales reflect the actual revenue earned after adjustments.