Question 1

Net sales is the total value at cost of all the products sold during an operating period.

Accepted Answer

Net sales is the total revenue from goods sold or services provided, minus returns, allowances, and discounts, not the cost of products sold.

Question 2

The main purpose of an operating statement is to determine a company's net profit over a specified period of time--and present data to support that figure.

Accepted Answer

The main purpose of an operating statement, also known as an income statement, is to calculate a company's net profit or loss for a specific period of time, typically a quarter or a year. It includes revenue, expenses, and other income to arrive at the bottom line net income figure. The data presented on the operating statement supports this calculation of net income.

Question 3

The net cost of delivered purchases equals the original invoice cost of purchases plus purchase discounts minus freight charges.

Accepted Answer

The net cost of delivered purchases equals the original invoice cost of purchases minus purchase discounts plus freight charges.

Question 4

A measure of the number of times the average inventory is sold during a year is stockturn rate.

Accepted Answer

Stockturn rate, also known as inventory turnover, measures the frequency with which a company is able to sell its inventory during a given period of time, usually a year. It is calculated by dividing the cost of goods sold by the average inventory for the period, and indicates how quickly a company is able to turn its inventory into sales.

Question 5

A company's gross margin must cover all the costs of making and selling the products, and hopefully leave a reasonable net profit.

Accepted Answer

The answer of A company's gross margin must cover all...

Question 6

It is impossible for a firm's stockturn rate to equal 1.0.

Accepted Answer

A firm's stockturn rate can equal 1.0 if its inventory level remains constant throughout the year.

Question 7

The total value AT COST of all the products sold during an operating period is the cost of sales.

Accepted Answer

The cost of sales refers to the total cost of all the products sold during an operating period, not their value at a different point of reference such as market value or retail price.

Question 8

"Expenses" (on an operating statement) usually include the cost of sales--both purchased and produced.

Accepted Answer

Expenses on an operating statement typically refer to operating expenses, which do not include the cost of sales. The cost of sales is usually listed separately as "Cost of Goods Sold" (COGS).

Question 9

The three main components of an operating statement are costs, assets, and profit.

Accepted Answer

The three main components of an operating statement are revenue, expenses, and profit. Assets are not typically included in an operating statement, as they are listed on a separate balance sheet.

Question 10

The stockturn rate shows how rapidly a firm's inventory is moving.

Accepted Answer

The stockturn rate calculates how often a company's inventory is sold and replenished during a particular time period, indicating how efficiently a company is managing its inventory.

Question 11

Returns or allowances are subtracted from net sales to find gross sales on an operating statement.

Accepted Answer

Returns or allowances are subtracted from gross sales to find net sales, not the other way around. Therefore, gross sales cannot be found by subtracting returns or allowances from net sales.

Question 12

Purchase discounts should be subtracted from the original invoice cost of purchases to get the net cost of purchases.

Accepted Answer

Purchase discounts are a deduction from the invoice cost of purchases, so they should be subtracted from the original invoice cost to get the net cost of purchases.

Question 13

The three main components of an operating statement are sales, costs, and profit or loss.

Accepted Answer

The three main components of an operating statement are indeed sales, costs, and profit or loss.

Question 14

Monthly operating statements might be used to uncover unfavorable trends in sales, costs, and profit.

Accepted Answer

Monthly operating statements provide a detailed breakdown of a company's revenue, expenses, and profit on a monthly basis. By comparing statements from different months, it is possible to identify trends that may be unfavorable, such as declining sales, rising costs, or decreasing profitability.

Question 15

Gross margin (or gross profit) is the amount left over after the cost of sales is subtracted from net sales.

Accepted Answer

Gross margin is calculated by subtracting the cost of goods sold from the net sales. This represents the amount of revenue that is available to cover operating expenses and generate profit.

Question 16

Gross margin (or gross profit) is the amount left over after the cost of sales is subtracted from gross sales.

Accepted Answer

The answer of Gross margin (or gross profit) is the...

Question 17

"Cost of sales" equals the total value of all the products purchased during an operating period plus freight in.

Accepted Answer

"Cost of sales" or "cost of goods sold" includes the cost of manufacturing or purchasing the products sold during the period, not just the total value of all products purchased. It also includes freight in, but it is adjusted for inventory changes.

Question 18

An operating statement is a simple summary of a company's assets, liabilities, and owners' equity at a particular time.

Accepted Answer

An operating statement, also known as an income statement, provides a summary of a company's revenue, expenses, and net income over a specific period of time. It does not include information about a company's assets, liabilities, and owners' equity at a particular time.

Question 19

Net sales and net profit are the same thing.

Accepted Answer

Net sales refers to the total amount of revenue generated by a company from the sale of goods or services, while net profit is the amount left over after all expenses, including taxes, have been deducted from that revenue. Therefore, net sales and net profit are not the same thing.

Question 20

The term "net profit" refers to the amount the company has earned from its operations during a particular period.

Accepted Answer

Net profit is the amount left after deducting all expenses, including cost of goods sold, operating expenses, and taxes, from the revenue earned during a particular period.

Quiz 23: Marketing Arithmetic