Accounting Basics Quiz

What is the formula to calculate Net Sales?

• Sales - Sales Discounts - Sales Returns & Allowances

• Sales + Sales Discounts + Sales Returns & Allowances

• Sales - Operating Expenses

• Sales + Operating Expenses

Which of the following is subtracted from Gross Profit to calculate Net Operating Income?

• Other Revenue

• Operating Expenses

• Freight

• Purchases Discounts

How is Cost of Goods Sold (COGS) calculated?

• Beginning Inventory + Net Purchases - Ending Inventory

• Beginning Inventory - Net Purchases + Ending Inventory

• Beginning Inventory + Ending Inventory - Net Purchases

• Beginning Inventory - Ending Inventory + Net Purchases

What is added to Purchases to calculate Net Purchases?

• Purchases Discounts

• Purchases Returns & Allowances

• Freight

• Operating Expenses

Calculate net sales by deducting sales discount and returns and allowances from gross sales.

Gross sales for Nevada Silver, a retailer of silver jewelry was $120,000 for the month of May.  Sales discounts amounted to $18,000.  There were no returns.  The difference, $102,000, is Nevada Silver’s:

• gross profit

• cost of goods sold

• gross revenues

• net sales

What is the formula for calculating gross profit?

• Net Sales−Cost of Goods Sold

• Selling price / Cost price

• Net Sales+Cost of Goods Sold

• Selling price x Cost price

Sales Revenue - Cost of Goods Sold = Gross Profit.

• True

• False

What is the formula for determining gross profit?

• Gross profit = Income + Cost of goods

• Gross profit = Income - Cost of goods

• Gross profit = Income x Cost of goods

• Gross profit = Income / Cost of goods

If a company has a revenue of £400,000, cost of goods sold of £250,000, and operating expenses of £100,000, what is the net profit? (- - -)

• £50,000

• £100,000

• £150,000

• £200,000

Which of the following is a component of net profit but not gross profit?

• Revenue

• Cost of Goods Sold

• Operating Expenses

• Sales Revenue