10 Questions
What type of account is the Sales account classified as in a merchandising business?
Revenue account
What is the purpose of the Freight-in account in a merchandising business?
To record transportation charges on incoming goods
In the periodic inventory system, when does the physical inventory count take place?
At the end of the fiscal period
What is the impact of a sale on physical inventory in the periodic inventory system?
No entry is made
What is included in the calculation of cost of goods sold?
Freight-in
Where is the Purchases account typically found in a ledger?
Expense section
What is the purpose of the Merchandise Inventory account?
To record the beginning inventory of a period
What is the difference between Freight-in and Delivery Expenses?
Freight-in is for incoming goods, while Delivery Expenses is for outgoing goods
What is the accounting entry for purchases on credit?
Purchases $$$ HST Recoverable $$$ Bank
What is the purpose of the Merchandise Inventory account at the end of the fiscal period?
To become the beginning inventory of the next period
Learn about the inventory cycle in a merchandising business, including physical inventory and periodic system. Understand how merchandise moves in and out of a business in a regular pattern.
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