Multiple Choice
Omar has saved \$1,000 from his sales. If he had total sales of \$1,200 and sales returns and allowances of \$200, what is his net sales amount?
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4. Merchandising Operations
Net Sales
Multiple Choice
Which of the following directly generates revenue for a business and is included in the calculation of net sales?
A
Receiving customer returns
B
Issuing shares of stock
C
Borrowing funds from a bank
D
Sales of goods or services to customers
Verified step by step guidance1
Understand the concept of net sales: Net sales represent the revenue generated from the sale of goods or services, minus any deductions such as returns, allowances, and discounts.
Identify the activities listed in the problem: Receiving customer returns, issuing shares of stock, borrowing funds from a bank, and sales of goods or services to customers.
Analyze each activity: Receiving customer returns reduces revenue and is not included in net sales. Issuing shares of stock is a financing activity and does not generate revenue. Borrowing funds from a bank is also a financing activity and does not contribute to net sales.
Focus on the correct activity: Sales of goods or services to customers directly generate revenue and are included in the calculation of net sales.
Conclude that the correct answer is sales of goods or services to customers, as this activity is directly tied to revenue generation and is part of net sales.
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