How do you calculate net sales?
A) Add operating expense and interest expense; then subtract from gross sales
B) Combine the total customer returns, customer sales, and customer allowances
C) Subtract customer returns from gross sales and add promotional allowances from vendors
D) Subtract cost of goods sold from gross sales
E) Subtract gross profits from promotional allowances

Question

Quizplus · Accepted Answer

To calculate net sales, you need to take gross sales and subtract any customer returns and deduct any promotional allowances given by vendors. Combining the total customer returns, sales, and allowances would not correctly calculate net sales as it would be double counting the returns and allowances. Adding operating and interest expenses and subtracting gross profits from promotional allowances are also not correct ways to calculate net sales. Subtracting cost of goods sold from gross sales would give you gross profit, not net sales.

How Do You Calculate Net Sales