Multiple Choice
Which of the following is an accurate description of net sales?
22
views
4. Merchandising Operations
Net Sales
Struggling with Financial Accounting?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Which of the following best describes 'Net Sales' in financial accounting?
A
Total sales revenue before any deductions
B
Total sales revenue minus cost of goods sold
C
Total cash received from customers during the period
D
Total sales revenue minus sales returns, allowances, and discounts
Verified step by step guidance1
Understand the concept of 'Net Sales': In financial accounting, 'Net Sales' refers to the total revenue generated from sales after deducting specific items such as sales returns, allowances, and discounts.
Identify the components of 'Net Sales': These include (1) Total Sales Revenue, (2) Sales Returns, (3) Sales Allowances, and (4) Sales Discounts.
Apply the formula for Net Sales: Net Sales = Total Sales Revenue - (Sales Returns + Sales Allowances + Sales Discounts).
Clarify the incorrect options: (1) 'Total sales revenue before any deductions' refers to gross sales, not net sales. (2) 'Total sales revenue minus cost of goods sold' calculates gross profit, not net sales. (3) 'Total cash received from customers during the period' relates to cash flow, not net sales.
Conclude that the correct description of 'Net Sales' is: 'Total sales revenue minus sales returns, allowances, and discounts.'
9:04mWatch next
Master Net Sales:Sales Discounts (Gross Method) with a bite sized video explanation from Brian
Start learningRelated Videos
Related Practice
