Multiple Choice
If Omar's company had total sales of \$15,000 in October, sales returns and allowances of \$1,000, and sales discounts of \$500, what is Omar's net sales for October?
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4. Merchandising Operations
Net Sales
Multiple Choice
If Sarah wanted her total amount paid (net sales) to be even lower, which of the following actions would most effectively achieve this?
A
Reduce the cost of goods sold
B
Increase the gross sales revenue
C
Decrease the amount of sales returns and allowances
D
Increase the amount of sales discounts offered to customers
Verified step by step guidance1
Understand the relationship between net sales and its components. Net sales is calculated as: .
Analyze the impact of increasing sales discounts. Offering more sales discounts reduces the net sales because sales discounts are subtracted from gross sales in the formula.
Compare the other options. Reducing the cost of goods sold does not directly affect net sales, as it impacts gross profit instead. Increasing gross sales revenue would increase net sales, not lower it. Decreasing sales returns and allowances would also increase net sales, not lower it.
Conclude that increasing sales discounts is the most effective way to lower the total amount paid (net sales), as it directly reduces the net sales figure in the formula.
Apply this understanding to similar scenarios by identifying which components of the net sales formula are being adjusted and how they impact the overall calculation.
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