Chapter 6 - Chapter 6 p.216 * TEST Major activities of a...

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Chapter 6 p.216 ** TEST Major activities of a business 1. Operating activities = day to day selling 2. Investing = purchase of assets 3. Financing = raising money to finance a business 1. Money can be borrowed from creditor (debt) 2. Money can be raised by selling stocks or ownership (equity) p.218 recognizing revenue 1. cash or a valid future payment 2. the work has been substantially completed Sales Discount 2/10, n/30 2% off if payment pay within 10 days p.224 Cash is the easiest asset to spend if it is stole. Control of cash 1. separating the handling of cash from the recoding 2. all cash receipts be deposited daily in the bank accounts 3. expenditure made with prenumbered checks Gross sales = sales disc – sales returns and allowances = net sales p.226 bad debts – customers who do not pay for the merchandise they purchased on credit Two ways to charging off bad debts 1. Allowance method – estimate the loss 2. Direct write off method –
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Chapter 6 - Chapter 6 p.216 * TEST Major activities of a...

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