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

The value of commercial property is not valued on which of the following bases related to net sales?

Net sales generated by the property

Capitalization of expected future net sales

Historical cost of the property

Market value based on comparable sales

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Verified step by step guidance

Understand the concept of property valuation: Commercial property valuation is typically based on methods that reflect its ability to generate income or its market value, rather than its historical cost.

Review the options provided: The question asks which basis is NOT used for valuing commercial property. The options include net sales generated by the property, capitalization of expected future net sales, historical cost of the property, and market value based on comparable sales.

Clarify the historical cost concept: Historical cost refers to the original purchase price of the property. In financial accounting, historical cost is often used for recording assets, but it is not a common basis for determining the current value of commercial property.

Analyze the other valuation methods: Net sales generated by the property and capitalization of expected future net sales are income-based approaches, while market value based on comparable sales is a market-based approach. These methods are widely used in property valuation.

Conclude that historical cost is the correct answer: Since historical cost does not reflect the current market value or income-generating potential of the property, it is not a basis for commercial property valuation in this context.