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

A woman sells her home for $450{,}000. She had purchased it for $300{,}000. What is the net sales amount to be reported on the income statement from this transaction?

$450{,}000

$300{,}000

$150{,}000

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Verified step by step guidance

Understand the concept: The income statement reports revenues and gains from transactions. In this case, the sale of the home is a transaction, and the net sales amount refers to the revenue generated from the sale, not the profit or loss.

Identify the selling price: The woman sold her home for $450,000. This is the revenue generated from the transaction and is the amount to be reported on the income statement.

Clarify the distinction: The purchase price of $300,000 and the profit of $150,000 (calculated as $450,000 - $300,000) are not directly reported as the net sales amount on the income statement. Only the selling price is reported as revenue.

Review the options provided: The correct answer is the selling price, which is $450,000. The other options ($0, $300,000, and $150,000) do not represent the net sales amount for this transaction.

Conclude: The net sales amount to be reported on the income statement is the selling price of $450,000, as it represents the revenue from the transaction.