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

The contribution margin equals sales minus all ______ expenses.

operating

fixed

variable

administrative

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Verified step by step guidance

Understand the concept of contribution margin: Contribution margin is the amount remaining from sales revenue after deducting variable expenses. It is used to cover fixed expenses and contribute to profit.

Identify the types of expenses: Expenses in financial accounting are typically categorized as variable, fixed, or mixed. Variable expenses change with the level of production or sales, while fixed expenses remain constant regardless of production levels.

Recognize the formula for contribution margin: Contribution margin is calculated as Sales Revenue - Variable Expenses. Fixed expenses are not deducted when calculating the contribution margin.

Clarify the role of variable expenses: Variable expenses include costs such as direct materials, direct labor, and variable overheads. These expenses fluctuate based on the volume of goods or services produced.

Apply the concept: To determine the contribution margin, subtract all variable expenses from the total sales revenue. Fixed and administrative expenses are not included in this calculation.