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

Which of the following is the most appropriate way for a company to measure profit growth over time?

By analyzing total assets at the end of each period

By reviewing the gross sales before any deductions

By calculating the total liabilities for each period

By comparing net income from one period to the next

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Verified step by step guidance

Understand the concept of profit growth: Profit growth refers to the increase in a company's profitability over time, typically measured by comparing financial performance metrics across different periods.

Identify the key metric for measuring profitability: Net income is the most appropriate metric for assessing profit growth because it represents the company's earnings after all expenses, taxes, and deductions have been accounted for.

Explain why other options are less suitable: Total assets, gross sales, and total liabilities do not directly measure profitability. Total assets reflect the company's resources, gross sales show revenue before deductions, and total liabilities represent obligations rather than earnings.

Describe the comparison process: To measure profit growth, calculate the net income for each period and compare the figures. This comparison reveals whether the company’s profitability is increasing, decreasing, or remaining stable over time.

Highlight the importance of consistency: Ensure that the net income figures being compared are calculated using consistent accounting methods and standards to avoid discrepancies that could distort the analysis.