Assignment: Principles of Accounting
1. Additional accounting procedures for a merchandising company. How would you describe the difference between the operating cycles of a Service Company and that of a Merchandising Company? What accounts would a merchandising company have in its chart of accounts that would be different from a service-based company?
2. What is the difference between a perpetual inventory system and a periodic inventory system? Pick one and discuss the advantages and disadvantages.
3. One unique aspect of merchandising financial statements is the Cost of Goods Sold account. How would you calculate cost of goods sold at the end of an accounting period under a periodic inventory system? What items make up cost of goods sold?
4. What is the difference between a single step income statement and a multiple step income statement? What are the advantages and disadvantages of each? If you were a business owner, which type would you prefer to use?
5. Describe non-operating activities.
6. Describe comprehensive income and comprehensive income statement.
7. (a) Explain the income measurement process in a merchandising company. (b) How does income measurement differ between a merchandising company and a service company?
8. What merchandising account(s) will appear in the post-closing trial balance?