Question

How do you compute net income for a merchandiser. Multiple choice question. Revenues - expenses. Net sales - cost of goods sold. Cost of goods sold - other expenses. Net sales - cost of goods sold - other expenses. g

Answer 1

Answer:

Net income for a merchandiser is computed as:

Net sales - cost of goods sold - other expenses.

Explanation:

Net sales are the sales revenue after deducting sales discounts and allowances.  The cost of goods sold represent the beginning inventory of merchandise and current period's purchases less the ending inventory.  The difference between the net sales and the cost of goods sold is called the gross profit.  From this, other expenses incurred in running the business and generating sales are deducted, including income taxes to arrive at the net income.