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 terms refers to the amount added to the cost of a product to set the selling price?

Discount

Net Sales

Gross Profit

Markup

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Verified step by step guidance

Understand the concept of 'Markup': Markup refers to the amount added to the cost of a product to determine its selling price. It is a key term in pricing strategies and helps businesses cover costs and generate profit.

Differentiate between the given terms: Discount refers to a reduction in the selling price, Net Sales is the revenue after deducting returns and allowances, and Gross Profit is the difference between sales revenue and the cost of goods sold. None of these terms directly relate to the process of setting the selling price.

Recognize that 'Markup' is the correct term: Markup is specifically used to calculate the selling price by adding a percentage or fixed amount to the cost of the product.

Apply the concept in practice: To calculate the selling price using markup, the formula is: Selling Price = Cost + Markup. This ensures the business covers its costs and achieves its desired profit margin.

Reinforce understanding: Markup is a critical concept in financial accounting and pricing strategies, as it directly impacts profitability and competitive positioning in the market.