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

Profit is best described as:

The excess of net sales over total expenses

The total value of inventory sold during the period

The sum of all revenues before deducting any expenses

The total amount of cash received from customers

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Verified step by step guidance

Understand the definition of profit in financial accounting: Profit is the financial gain achieved when revenues exceed expenses during a specific period.

Analyze the options provided in the problem. The correct definition of profit should align with the concept of net income, which is calculated as revenues minus expenses.

Option 1: 'The excess of net sales over total expenses' aligns with the definition of profit, as it represents the surplus after deducting expenses from revenues.

Option 2: 'The total value of inventory sold during the period' refers to the cost of goods sold (COGS), not profit. This is a component of expenses, not the final profit figure.

Option 3: 'The sum of all revenues before deducting any expenses' describes gross revenue, not profit, as it does not account for expenses. Option 4: 'The total amount of cash received from customers' refers to cash inflows, which may not directly relate to profit due to timing differences in accrual accounting.