Multiple Choice
Given the following information: Selling price per unit = \$20, Variable cost per unit = \$12, Fixed costs = \$80, what are the unit sales required to attain a target profit of \$120?
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4. Merchandising Operations
Net Sales
Multiple Choice
Which one of the following terms is most similar in meaning to 'net sales' in financial accounting?
A
Total revenue minus sales returns and allowances
B
Net income
C
Gross profit
D
Operating income
Verified step by step guidance1
Understand the term 'net sales' in financial accounting. Net sales represent the total revenue generated from sales after deducting sales returns, allowances, and discounts.
Analyze the options provided: 'Total revenue minus sales returns and allowances,' 'Net income,' 'Gross profit,' and 'Operating income.'
Compare each option to the definition of 'net sales':
Option 1 ('Total revenue minus sales returns and allowances') matches the definition of net sales, as it accounts for deductions like returns and allowances.
Options 2 ('Net income'), 3 ('Gross profit'), and 4 ('Operating income') do not align with the definition of net sales. Net income refers to the profit after all expenses, gross profit is revenue minus cost of goods sold, and operating income is profit from core operations.
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