Multiple Choice
A high expenses to income ratio and low savings amount are ___ when analyzing net sales and overall financial health.
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4. Merchandising Operations
Net Sales
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If a company reports gross sales of $7,000 and has sales returns and allowances of $500, what is the net sales amount?
A
$7,500
B
$500
C
$6,500
D
$7,000
Verified step by step guidance1
Understand the concept of net sales: Net sales is calculated by subtracting sales returns and allowances from gross sales. It represents the actual revenue earned from sales after accounting for returns and discounts.
Identify the given values: Gross sales are reported as $7,000, and sales returns and allowances are $500.
Set up the formula for net sales: Net Sales = Gross Sales - Sales Returns and Allowances.
Substitute the given values into the formula: Net Sales = $7,000 - $500.
Perform the subtraction to determine the net sales amount, which represents the company's actual revenue from sales after accounting for returns and allowances.
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