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

Which of the following is calculated as revenues minus expenses?

Net Income

Net Sales

Operating Income

Gross Profit

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Understand the concept of Net Income: Net Income is the amount of money a company earns after subtracting all expenses, including operating expenses, taxes, and interest, from its total revenues.

Review the formula for Net Income: Net Income = Revenues - Expenses. This formula represents the calculation of the company's profitability after all costs are accounted for.

Compare Net Income with other terms: Net Sales refers to total sales minus returns, allowances, and discounts. Operating Income is derived from operating revenues minus operating expenses. Gross Profit is calculated as revenues minus the cost of goods sold (COGS).

Identify the key difference: Net Income specifically accounts for all expenses, not just operating expenses or COGS, making it the most comprehensive measure of profitability among the options provided.

Conclude that the correct answer to the question is Net Income, as it is calculated as revenues minus expenses, encompassing all costs incurred by the business.