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 related to net sales provides an increase in assets or wealth?

Recognizing sales returns and allowances

Recording additional sales revenue

Writing off uncollectible accounts

Granting sales discounts to customers

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Verified step by step guidance

Understand the concept of net sales: Net sales is calculated as gross sales minus sales returns and allowances, sales discounts, and other deductions. It represents the actual revenue earned from sales transactions.

Analyze the impact of recognizing sales returns and allowances: Sales returns and allowances reduce the gross sales figure, which decreases net sales and does not increase assets or wealth.

Evaluate the effect of recording additional sales revenue: Recording additional sales revenue increases the gross sales figure, which directly contributes to an increase in net sales. This, in turn, increases assets or wealth as it reflects higher revenue generation.

Consider the impact of writing off uncollectible accounts: Writing off uncollectible accounts reduces accounts receivable and does not contribute to an increase in assets or wealth. It is a loss recognition process.

Assess the effect of granting sales discounts to customers: Sales discounts reduce the gross sales figure, which decreases net sales and does not increase assets or wealth.