Net sales is equal to gross sales less ____________________ and ...

[sam.t96]

Net sales is equal to gross sales less ___________________ _ and ___________________ _.
 Fill in the blank(s) with correct word

Question 2

Janna Bronson is trying to decide whether or not to prepare the statement of cash flows using the direct method. Explain to Janna the advantages and disadvantages of using this method.
 
  What will be an ideal response?

[shaquita]

Answer to Question 1

sales returns and allowances, sales discounts
sales discounts, sales returns and allowances

Answer to Question 2

The direct method is the method preferred by the FASB. The difference between the two methods applies only to the operating activities section. The actual amount of cash received from customers and the actual amount of cash paid for purchases and expenses are the amounts reported using the direct method. The direct method is easier to read and understand. Even though the FASB prefers that companies use the direct method, more than 90 of companies use the indirect method. Practicing accountants believe that the indirect method is easier to prepare. In addition, there is a requirement that when using the direct method, companies also have to provide a reconciliation of net income and cash from operating activities.