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 subtracted from gross sales to calculate net sales for a restaurant?

Sales returns and allowances

Cost of goods sold

Overhead expenses

Depreciation expense

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Verified step by step guidance

Understand the concept of gross sales: Gross sales represent the total revenue generated from sales before any deductions.

Learn what net sales are: Net sales are calculated by subtracting specific deductions from gross sales. These deductions typically include sales returns, allowances, and discounts.

Identify the relevant deductions: Sales returns and allowances are amounts deducted from gross sales due to returned goods or allowances provided to customers for damaged or unsatisfactory products.

Clarify why other options are not subtracted: Cost of goods sold, overhead expenses, and depreciation expense are not subtracted from gross sales to calculate net sales. These are used in other calculations, such as determining gross profit or operating expenses.

Conclude the calculation process: To calculate net sales, subtract sales returns and allowances from gross sales using the formula: