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

South Avenue Publishing produces self-help books. The company's profit is the:

Amount remaining after subtracting cost of goods sold, operating expenses, and taxes from net sales

Sum of all revenues and gains before any expenses are deducted

Total cash received from customers before any deductions

Difference between gross sales and sales returns only

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Verified step by step guidance

Understand the concept of profit in financial accounting. Profit is the amount remaining after all relevant expenses are deducted from revenues. It is a key indicator of a company's financial performance.

Identify the components involved in calculating profit. These typically include net sales (gross sales minus sales returns and allowances), cost of goods sold (COGS), operating expenses, and taxes.

Break down the calculation process: Start with net sales, subtract the cost of goods sold to determine gross profit. Then subtract operating expenses to find operating profit. Finally, subtract taxes to arrive at the net profit.

Compare the given options to the definition of profit. The correct answer should align with the concept of net profit, which is the amount remaining after subtracting COGS, operating expenses, and taxes from net sales.

Eliminate incorrect options by analyzing their definitions. For example, 'sum of all revenues and gains before any expenses are deducted' refers to gross revenue, not profit. Similarly, 'total cash received from customers before any deductions' refers to cash inflow, not profit. 'Difference between gross sales and sales returns only' refers to net sales, not profit.