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

Sales revenue less cost of goods sold is called:

Net Income

Operating Income

Net Sales

Gross Profit

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Verified step by step guidance

Understand the concept of Gross Profit: Gross Profit is the financial metric that represents the difference between Sales Revenue and the Cost of Goods Sold (COGS). It indicates the profitability of a company before accounting for operating expenses, taxes, and other costs.

Identify the components: Sales Revenue is the total income generated from selling goods or services, while COGS represents the direct costs associated with producing or purchasing those goods or services.

Apply the formula for Gross Profit: Gross Profit = Sales Revenue - Cost of Goods Sold. This formula helps calculate the amount of profit earned from core business activities.

Differentiate Gross Profit from other terms: Net Income includes all expenses, taxes, and interest, while Operating Income accounts for operating expenses but excludes taxes and interest. Net Sales refers to Sales Revenue after deducting returns, allowances, and discounts.

Recognize the importance of Gross Profit: It is a key indicator of a company's efficiency in managing production costs and pricing strategies, and it serves as the foundation for further profitability analysis.