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How can net sales be determined?
  • a)
    By deducting sales returns from gross sales.
  • b)
    By adding sales returns to gross sales.
  • c)
    By deducting purchase returns from gross sales.
  • d)
    By adding purchase returns to gross sales.
Correct answer is option 'A'. Can you explain this answer?
Verified Answer
How can net sales be determined?a)By deducting sales returns from gros...
Net sales can be determined by deducting sales returns from gross sales. Sales returns are the goods returned by customers, which are deducted from the total sales to calculate the net sales.
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Most Upvoted Answer
How can net sales be determined?a)By deducting sales returns from gros...
To determine net sales, we need to calculate the amount of sales after deducting any returns or allowances. This can be done by following the steps below:
- Calculate Gross Sales: Gross sales refer to the total amount of sales made by a company within a specific period, before any returns or allowances are deducted.
- Deduct Sales Returns: Sales returns are the products that customers have returned to the company for a refund. To calculate net sales, deduct the total amount of sales returns from the gross sales. This will give you the total amount of sales after returns have been accounted for.
- Formula: Net Sales = Gross Sales - Sales Returns
By following this formula and deducting sales returns from gross sales, we can determine the net sales figure for a company. This is an important metric to analyze the overall performance and revenue generated by the business, as it provides a more accurate representation of the actual sales revenue.
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