Multiple Choice
When evaluating cost-cutting proposals, which of the following is the most appropriate measure to use for assessing the impact on a company's net sales?
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4. Merchandising Operations
Net Sales
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Which of the following best describes 'Net Sales' on a company's income statement?
A
Total assets minus total liabilities
B
The total amount of debt and equity issued by the firm
C
Total sales revenue minus sales returns, allowances, and discounts
D
Total cash received from customers during the period
Verified step by step guidance1
Understand the concept of 'Net Sales': Net Sales represents the revenue a company earns from its sales activities after accounting for deductions such as sales returns, allowances, and discounts.
Identify the components of Net Sales: These include Total Sales Revenue, Sales Returns, Sales Allowances, and Sales Discounts.
Recognize the formula for calculating Net Sales: Net Sales = Total Sales Revenue - Sales Returns - Sales Allowances - Sales Discounts.
Clarify the difference between Net Sales and other financial terms: Net Sales is not related to total assets, liabilities, or cash received from customers. It specifically pertains to sales revenue adjusted for deductions.
Apply the concept to the given options: The correct description of Net Sales is 'Total sales revenue minus sales returns, allowances, and discounts,' as it aligns with the definition and formula provided.
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