Chapter 4 - Chapter 4: Accounting for Merchandise Business...

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Chapter 4: Accounting for Merchandise Business
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Service Businesses vs. Merchandise Operations Service Businesses Revenue activities involve providing services to customers. Example: Family Health Care, P.C. Merchandise Operations Revenue activities involve the buying and selling of merchandise. Example: Home Depot Inc.
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Gross Profit for a Merchandise Operation Gross Profit = Net Sales - COGS Net Sales: revenue less returns and discounts. Cost of Goods Sold: cost paid for merchandise.
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Financial Statements for a Merchandising Business We’ll illustrate the financial statements of a merchandising business by looking at NetSolutions, a retailer of computer hardware and software.
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Two Income Statement Formats Multiple-Step Income Statement Contains several sections, subsections, and subtotals. Single-Step Income Statement Deducts the total of all expenses in one step from the total of all revenues.
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Sales Transactions Normally recorded by increasing cash/ accounts receivable and increasing sales revenue.
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NetSolutions Sales Transactions
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This note was uploaded on 02/24/2011 for the course ACCT 7080 taught by Professor Housain during the Spring '11 term at U. Memphis.

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Chapter 4 - Chapter 4: Accounting for Merchandise Business...

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