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 statements regarding gross profit is FALSE?

Gross profit is an important measure for assessing a company's core profitability from sales.

Gross profit represents the profit a company makes after deducting all operating expenses.

Gross profit does not include deductions for selling, general, and administrative expenses.

Gross profit is calculated as net sales minus cost of goods sold.

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Verified step by step guidance

Understand the definition of gross profit: Gross profit is the profit a company makes after deducting the cost of goods sold (COGS) from net sales. It does not account for operating expenses such as selling, general, and administrative expenses.

Analyze the first statement: 'Gross profit is an important measure for assessing a company's core profitability from sales.' This is true because gross profit reflects the profitability of a company's primary business activities before considering other expenses.

Analyze the second statement: 'Gross profit represents the profit a company makes after deducting all operating expenses.' This is false because gross profit only deducts the cost of goods sold (COGS) and does not include operating expenses like selling, general, and administrative expenses.

Analyze the third statement: 'Gross profit does not include deductions for selling, general, and administrative expenses.' This is true because these expenses are not part of the calculation for gross profit; they are considered in operating profit.

Analyze the fourth statement: 'Gross profit is calculated as net sales minus cost of goods sold.' This is true because the formula for gross profit is: