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

In the context of net sales, what important information does the break-even quantity provide to a personal trainer?

The maximum number of clients a personal trainer can serve in a month.

The total revenue earned from all training sessions before any deductions.

The number of training sessions needed to cover all fixed and variable costs, resulting in zero profit or loss.

The amount of net sales after subtracting discounts, returns, and allowances.

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Verified step by step guidance

Understand the concept of break-even quantity: It represents the number of units (or sessions, in this case) that must be sold to cover all fixed and variable costs, resulting in zero profit or loss.

Identify the components of costs: Fixed costs are expenses that do not change with the number of sessions (e.g., rent, equipment costs), while variable costs change with the number of sessions (e.g., materials, hourly wages).

Use the break-even formula: \( \text{Break-even quantity} = \frac{\text{Fixed Costs}}{\text{Price per session} - \text{Variable Cost per session}} \). This formula helps calculate the number of sessions needed to cover all costs.

Relate the break-even quantity to net sales: Net sales are the total revenue after subtracting discounts, returns, and allowances. The break-even quantity ensures that the revenue generated from these sessions equals the total costs, resulting in zero profit or loss.

Apply the concept to the personal trainer's business: The break-even quantity provides critical information about the minimum number of training sessions required to avoid a financial loss, helping the trainer plan their pricing and service strategy effectively.