BUS 210 Chapter 5 HW

BUS 210 Chapter 5 HW - Chapter 5 HW Questions 1. a) I agree...

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Chapter 5 HW Questions 1. a) I agree that the accounting cycle of a merchandising company is longer than a service company. This is because there is the additional step of storing inventory and selling inventory. b) It would be similar because the net income is calculated by taking the difference between the sales and the expenses and cost of goods sold. 2. For a merchandising company, revenue is recorded when goods pass to the buyer and expenses are recorded as cost of goods sold, operating and selling and administrative. Revenue is recorded when services are performed and expenses only exist under operating for a service company. 3. The main difference between perpetual and periodic system is that perpetual records cost of goods sold on every sale while periodic requires a physical count to determine cost of goods sold. The potential benefits of a perpetual system are having knowledge of exactly how much inventory is available and doesn’t require manpower to do a physical count. 4. a) The income measurement process in a merchandising company is taking the sales minus sales return, sales allowance, sales discount, cost of goods sold, selling expense and
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This note was uploaded on 03/15/2011 for the course BUS 210 taught by Professor Schmeltz during the Spring '08 term at SUNY Stony Brook.

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BUS 210 Chapter 5 HW - Chapter 5 HW Questions 1. a) I agree...

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