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 actions would directly increase a company's net sales, potentially leading to a higher stock price?

Delaying revenue recognition to the next period

Issuing more shares of common stock

Increasing depreciation expense

Reducing sales returns and allowances

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Verified step by step guidance

Understand the concept of net sales: Net sales are calculated as gross sales minus sales returns, allowances, and discounts. It represents the actual revenue a company earns from its sales activities.

Analyze the impact of sales returns and allowances: Sales returns and allowances reduce the gross sales figure, thereby decreasing net sales. Reducing these amounts would directly increase net sales.

Evaluate the other options: Delaying revenue recognition to the next period would not increase net sales in the current period. Issuing more shares of common stock affects equity, not net sales. Increasing depreciation expense impacts expenses and net income, but not net sales.

Focus on the correct action: Reducing sales returns and allowances improves net sales by minimizing deductions from gross sales, which can positively impact the company's financial performance and potentially lead to a higher stock price.

Conclude the reasoning: By reducing sales returns and allowances, the company can present stronger revenue figures, which may attract investors and positively influence the stock price.