Final answer:
The question pertains to a business transaction where merchandise is sold for a profit. It illustrates the basic accounting principle of deducting cost of goods sold from sales revenue to calculate profit. This concept is fundamental in business, finance, and accounting studies.
Step-by-step explanation:
The question revolves around a basic business transaction involving the sale of merchandise. The sale generated revenue of $35,000 cash from merchandise that cost $20,000, resulting in a reported profit. This scenario is typical in accounting and finance, where the cost of goods sold (COGS) is subtracted from sales revenue to calculate profit. The details provided in the question are similar to example scenarios where transactions, costs, and sales are presented in various forms, such as someone purchasing a house for a certain amount and later selling it for more, or a t-shirt company selling products at a set price. These examples aim to illustrate the principles of revenue, cost, profit, expenses, and investment valuation.