WRD_ch06_SV - 6 Accounting for Merchandising Businesses...

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6 Accounting for Merchandising Businesses Student Version
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Distinguish between the activities and financial statements of service and merchandising businesses. 1 6-2
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6-3 When merchandise is sold, the revenue is reported as sales, and its cost is recognized as an expense called cost of merchandise sold . 1
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6-4 Merchandise on hand (not sold) at the end of an accounting period is called merchandise inventory . 1
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6-5 1
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6-6 Describe and illustrate the financial statements of a merchandising business. 2 6-6
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6-7 The multiple-step income statement contains several sections, subsections, and subtotals . 2 Multiple-Step Income Statement
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6-8 2 Exhibit 1 Multiple-Step Income Statement (continued)
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6-9 2 Multiple-Step Income Statement (continued) Exhibit 1 (continued on Slide 17 )
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6-10 The buyer may return merchandise to the seller ( a purchase return ), or the buyer may receive a reduction in the initial price at which the merchandise was purchased ( a purchase allowance ). 2
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6-11 You have seen how sellers may offer customers sales discounts for early payment of their bills. From the buyer’s perspective , such discounts are referred to as purchase discounts . 2
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6-12 If merchandise inventory at the end of the period is determined by taking a physical count of inventory on hand, a periodic inventory system is being used. 2
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6-13 Under the perpetual inventory system of accounting, the amounts of inventory available for sale and sold are continuously (perpetually) updated in the inventory records. 2
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6-14 2 Cost of Merchandise Sold Exhibit 2
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2 Selling expenses are incurred directly in the selling of merchandise. Administrative expenses
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This note was uploaded on 04/13/2010 for the course ACTG 1A q taught by Professor T during the Fall '09 term at Foothill College.

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WRD_ch06_SV - 6 Accounting for Merchandising Businesses...

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