How are sales reported on the income statement? a. Sales are shown for three years net...
How are sales reported on the income statement?
a. Sales are shown for three years net of returns and allowances. b. Sales amounts are inflation-adjusted. c. Sales are shown for two years and are reported in nominal terms. d. Sales are shown at gross amounts, adjusted for inflation.
Homework Answers
Answer (A). Sales are shown for three years net of returns and allowances.
Total sales revenue for each year of the three-year period is shown in net of returns and allowances
- If a company's sales are increasing/decreasing, it is important to determine whether the change is a result of price, volume, or a combination of both
- The reason for sales growth/decline is in the MD&A and Analysis section of the annual report or the 10-K report
- -"Real" (inflation adjusted) sales growth
- "Nominal" (as reported) sales growth
- An adjustment of the reported sales figure with the Consumer Price Index (or some other measure of general inflation) will enable the analyst to compare changes in real and nominal terms
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How are sales reported on the income statement?
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