Chapter 6 and 7.

Chapter 6 and 7. - business papers. Two examples are:...

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Chapter 6: Where is the amount of merchandise inventory disclosed in the financial statements? It is disclosed in the income statement and balanced sheet. What is the meaning of market as it is used in determining the lower of cost or market for inventory? The meaning of market as it is used in determining the LMC is the current replacement cost of purchasing the same inventory items in the usual manner. What guidance does the principle of conservatism offer? The principle of conservatism provides that accounting for a business should be fair and reasonable. They should do so in a way that neither overstates the affairs of the business or the results of operation. Chapter 7: What are source documents? Give two examples. Source of information for accounting entries that can be in either paper or electronic form; also called
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Unformatted text preview: business papers. Two examples are: Deposit slips and notes for loans. When special journals are used, they are usually used to record each of four different types of transactions. What are these four types of transactions? The four types of transactions are: Sales journal, Cash receipts journal, Purchase journal and Cash disbursement journal. Why should sales to and receipts of cash from credit customers be recorded and posted immediately? Companies can not allow a debtor to exceed their limit or expiration of credit. If it is not recorded then the debtor will exceed their respective limit as well as the company to have problems with proper accounting....
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This note was uploaded on 11/15/2010 for the course AC 201 taught by Professor Leland during the Fall '10 term at Park.

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