Multiple Choice
Which of the following best describes 'Net Sales' in financial accounting?
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4. Merchandising Operations
Net Sales
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All payments received from clients for services and home care products purchased is known as:
A
Gross Profit
B
Accounts Receivable
C
Net Sales
D
Operating Income
Verified step by step guidance1
Understand the key terms in the question: 'Net Sales' refers to the total revenue generated from sales of goods or services, minus any returns, allowances, and discounts. It represents the actual revenue earned by the business.
Review the other options provided: 'Gross Profit' is the revenue remaining after deducting the cost of goods sold (COGS). 'Accounts Receivable' represents money owed to the company by clients for credit sales. 'Operating Income' is the profit earned from regular business operations after deducting operating expenses.
Identify the context of the question: Payments received from clients for services and home care products indicate actual revenue from sales, which aligns with the definition of 'Net Sales.'
Eliminate incorrect options: 'Gross Profit' and 'Operating Income' involve additional calculations beyond just payments received. 'Accounts Receivable' refers to amounts not yet received, so it does not match the description in the question.
Conclude that the correct answer is 'Net Sales,' as it directly represents the payments received from clients for services and products sold.
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