Multiple Choice
Which of the following best defines 'Net Sales' in financial accounting?
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4. Merchandising Operations
Net Sales
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The profit from a product is also called the:
A
Gross margin
B
Operating expenses
C
Net sales
D
Accounts receivable
Verified step by step guidance1
Understand the concept of 'profit from a product': In Financial Accounting, profit from a product typically refers to the revenue generated from selling the product minus the costs directly associated with producing or acquiring the product.
Review the term 'Gross Margin': Gross margin is calculated as the difference between net sales (revenue from selling goods or services) and the cost of goods sold (COGS). It represents the profit from a product before deducting operating expenses.
Analyze the term 'Operating Expenses': Operating expenses are costs incurred during the normal operations of a business, such as rent, utilities, and salaries. These are not directly tied to the production of a specific product.
Evaluate the term 'Net Sales': Net sales refer to the total revenue from sales minus returns, allowances, and discounts. It is a measure of total sales but does not directly represent profit.
Consider the term 'Accounts Receivable': Accounts receivable is the money owed to a company by its customers for goods or services delivered but not yet paid for. It is an asset, not a measure of profit.
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