High School

On a firm's income statement, net sales consists of:

1) Cost of sales minus allowances for returned goods and discounts
2) Total sales minus allowances for returned goods and discounts
3) Operating expenses minus cost of sales
4) Cost of sales minus operating expenses
5) Total sales minus operating expenses

Answer :

Final answer:

Net sales on an income statement are calculated as total sales minus allowances for returned goods and discounts, representing the revenue retained after such deductions. So the correct answer is 2). total sales minus allowances for returned goods and discounts.

Explanation:

So the correct answer is 2). total sales minus allowances for returned goods and discounts. On a firm's income statement, net sales consist of total sales minus allowances for returned goods and discounts.

This calculation reflects the actual revenue the company retains after accounting for products that were returned and any discounts that were provided to customers. The term 'allowances' covers both of these deductions from the gross sales figure.

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