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5.11: Discussion Questions
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- How does the income statement prepared for a company that sells goods differ from that prepared for a service business?
- How is gross profit calculated? What relationships do the gross profit and gross profit percentage calculations express? Explain, using an example.
- What are some common types of transactions that are recorded in the merchandise Inventory account?
- Contrast and explain the sales and collection cycle and the purchase and payment cycle.
- What contra accounts are used in conjunction with sales? What are their functions?
- (Appendix) Compare the perpetual and periodic inventory systems. What are some advantages of each?