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List the accounts of a merchandising company which employs a perpetual inventory system that will not...

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Accounting

  1. List the accounts of a merchandising companywhich employs a perpetual inventory system that will not appear inthe financial statements of a service company.When listing the account names, indicate if it appears on theIncome Statement or on theBalance Sheet..
  2. Explain what sales discounts and apurchase discounts are. Whataccount will a buyer credit for the amount of thepurchase discount.
  3. Why would a financial statement user prefer amultiple-step income statement instead of asingle-step income statement.
  4. Share any struggles you had with this chapter that you wouldlike more clarification on.

Answer & Explanation Solved by verified expert
4.4 Ratings (631 Votes)
Comparing Merchandising versus Service Activities and Transactions 1Service companies sell intangible services and do not have inventory Their operating cycle begins with cashonhand providing service to customers and collecting customer payments 2Merchandising companies resell goods to consumers Their operating cycle begins with cashonhand purchasing inventory selling merchandise and collecting customer payments 3A purchase discount is an incentive for a retailer to pay their account early Credit terms establish the percentage discount and Merchandise Inventory decreases if the discount is taken 4A retailer receives a full or partial refund for returning or keeping defective merchandise    See Answer
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