Salaried employees can usually count on which of the following being deducted from their gross pay to arrive at net sales for a company?

• A. Depreciation expense
• B. Interest income
• C. Inventory purchases
• D. Sales returns and allowances

Answer: (D)

Verified step by step guidance

1. Understand the concept of net sales: Net sales is calculated by subtracting sales returns and allowances, as well as sales discounts, from gross sales. It represents the actual revenue earned from sales after accounting for deductions.
2. Identify the items listed in the problem: Depreciation expense, interest income, inventory purchases, and sales returns and allowances.
3. Analyze each item: Depreciation expense is related to the allocation of the cost of tangible assets over their useful life and does not directly impact net sales. Interest income is revenue earned from investments and is unrelated to sales. Inventory purchases are part of the cost of goods sold calculation, not net sales.
4. Focus on sales returns and allowances: These are deductions from gross sales due to returned goods or allowances granted to customers for defective or unsatisfactory products. They directly reduce gross sales to arrive at net sales.
5. Conclude that sales returns and allowances are the correct deduction from gross sales to calculate net sales, as they directly impact the revenue generated from sales.