Question

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

Answer 1

Part 1

Net income of merchandiser is calculated using the following formula :

Net income = Net sales - Cost of goods sold - Other expenses

Second option is the correct option.

Ex.

Let net sales = $10,000

Cost of goods sold = $5,000

Other expenses = $1,000

Net income = Net sales - Cost of goods sold - Other expenses

= 10,000 - 5,000 - 1,000

= $4,000

Part 2

Credit terms = 2/10, n/30

Credit terms of 2/10, n/30 implies that 2% discount will be allowed if the buyer makes payment within 10 days of invoice and no discount will be allowed if payment is made after 10 days but before 30 days.

Second option is correct