Response to the following questions:
1. What types of inventory will a retailing firm have? A manufacturing firm?
2. What is depreciation? Which tangible assets are depreciated, and which are not? Why?
3. For reporting purposes, management prefers higher profits; for tax purposes, lower taxable income is desired. To meet these goals, firms often use different methods of depreciation for tax and reporting purposes. Which depreciation method is best for reporting and which for tax purposes in the short run? Why?