Multiple Choice
As the owner of your account, managing your money is ______ responsibility.
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4. Merchandising Operations
Net Sales
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Which of the following best describes what net sales represent on a company's income statement?
A
Total revenue minus cost of goods sold
B
Total revenue minus operating expenses
C
Total revenue minus sales returns, allowances, and discounts
D
Total revenue before any deductions
Verified step by step guidance1
Understand the concept of net sales: Net sales represent the actual revenue a company earns from its sales activities after accounting for deductions such as sales returns, allowances, and discounts.
Identify the components of total revenue: Total revenue is the gross amount earned from sales before any deductions are applied.
Learn about sales returns, allowances, and discounts: Sales returns refer to products returned by customers, allowances are price reductions given for defective or unsatisfactory goods, and discounts are reductions in price offered to customers for early payment or promotional purposes.
Subtract the deductions from total revenue: To calculate net sales, subtract the total amount of sales returns, allowances, and discounts from the total revenue.
Recognize that net sales do not include deductions for cost of goods sold or operating expenses: These are separate items on the income statement and are not part of the calculation for net sales.
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