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- How does the income statement prepared for a company that sells goods differ from that prepared for a service business?
- How is gross profit calculated? What relationships do the gross profit and gross profit percentage calculations express? Explain, using an example.
- What is a perpetual inventory system?
- How is the purchase of merchandize inventory on credit recorded in a perpetual system?
- How is a purchase return recorded in a perpetual system?
- What does the credit term of “1/15, n30” mean?
- How is a purchase discount recorded in a perpetual system?
- How is the sale of merchandize inventory on credit recorded in a perpetual system?
- How is a sales return recorded in a perpetual system?
- What is a sales discount and how is it recorded in a perpetual inventory system?
- Why does merchandize inventory need to be adjusted at the end of the accounting period and how is this done in a perpetual inventory system?
- What types of transactions affect merchandize inventory in a perpetual inventory system?
- How are the closing entries for a merchandizer using a perpetual inventory system different than for a service company?
- When reporting expenses on multi-step income statement, how is the function of an expense reported? The nature of an expense?
- On a classified multiple-step income statement, what is reported under the heading ‘Other revenues and expenses’ and why?
- (Appendix) Compare the perpetual and periodic inventory systems. What are some advantages of each?
- (Appendix) What contra accounts are used in conjunction with purchases using the periodic inventory system?
- (Appendix) How is cost of goods available for sale calculated using the periodic inventory system?
- (Appendix) How is cost of goods sold calculated using the periodic inventory system?
- (Appendix) Explain how ending inventory is recorded in the accounts of a business that sells goods using a periodic inventory system.
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