Multiple Choice
10. Which of the following best describes 'Net Sales' on a company's income statement?
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4. Merchandising Operations
Net Sales
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Which of the following sets of information would be sufficient to determine a firm's profit for a given period?
A
Net sales and inventory turnover
B
Net sales and accounts receivable
C
Net sales and total expenses
D
Net sales and total assets
Verified step by step guidance1
Understand the concept of profit: Profit is calculated as the difference between a firm's revenues (net sales) and its expenses during a given period.
Analyze the options provided: Net sales and inventory turnover, Net sales and accounts receivable, Net sales and total expenses, and Net sales and total assets.
Evaluate each option: Net sales and inventory turnover provide information about efficiency but do not include expenses. Net sales and accounts receivable focus on collections but do not include expenses. Net sales and total assets provide information about resources but do not include expenses.
Identify the correct option: Net sales and total expenses are sufficient to calculate profit because profit is derived from subtracting total expenses from net sales.
Conclude: The correct answer is 'Net sales and total expenses,' as this set of information directly relates to the formula for calculating profit.
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