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

Gross rental income minus which of the following results in net rent for a rental property?

Depreciation expense

Property appreciation

Rental expenses

Mortgage principal payments

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Verified step by step guidance

Understand the concept of gross rental income: Gross rental income refers to the total income generated from renting out a property before any expenses are deducted.

Identify the components that are deducted to calculate net rent: Net rent is calculated by subtracting rental expenses from gross rental income. Rental expenses typically include costs such as property maintenance, insurance, property taxes, and utilities.

Clarify why depreciation expense and mortgage principal payments are not deducted: Depreciation expense is a non-cash accounting entry used for tax purposes and does not directly affect net rent. Mortgage principal payments are a financing activity and are not considered rental expenses.

Explain why property appreciation is irrelevant: Property appreciation refers to the increase in the value of the property over time and does not impact the calculation of net rent, as it is not an expense.

Conclude that rental expenses are the correct deduction: To calculate net rent, subtract rental expenses from gross rental income. This provides the income remaining after covering the costs associated with operating the rental property.