Case Study 1

CHAPTER 5 Merchandising Operations and the Multiple-Step Income Statement ANSWERS TO QUESTIONS ?1.(a)Disagree. The steps in the ac takeing cycle atomic number 18 the identical for both a marketing ac bon ton and a servicing company. (b)The criterion of income is conceptually the same. In both types of companies, final income (or loss) results from the unified of expenses with tax income enhancements. ?2.The components of revenues and expenses differ as follows: | | Merchandising| | Service| RevenuesExpenses| | gross sales exist of Goods interchange and operating(a)| | Fees, Rents, etc.Operating (only)| ?3.Under a catchic stock certificate frame the company does non keep track of how many an(prenominal) units be on hand. kind of it takes a physical count at the end of the period to determine ending breed and embody of goods sold. Under a eonian system the company adjusts its neckcloth account apiece time it purchases or sells inventorying. indeed it eternally has a depict of its available inventory. Having knowledge of inventory balances helps a company lift lost sales payable to stock-outs as well as carrying too much inventory on hand (which results in additional storage and handling addresss). The get department abide make better decisions with the attend to of perpetual inventory records. ?4.

(a)The income beat process is as follows: SalesRevenue| slight| Cost ofGoodsSold| Equals| sodding(a)Profit| Less| OperatingExpenses| Equals| NetIncome| (b)Income measurement in a marketing company differs from a helping company as follows: (a) sales are the primary tooth root of revenue and (b) expenses are split up into twain main categories: cost of goods sold and operating expenses. ?5.Sales revenue$100,000 Cost of goods sold??70,000 Gross profit$?30,000 ?6.Agree. In union with the revenue recognition principle, sales revenues are generally considered to be earned when the goods are transferred from the seller to the buyer; that is, when the exchange transaction...If you collateral request to get a full essay, order it on our website: Ordercustompaper.com

If you want to get a full essay, wisit our page: write my paper