The sales through MasterCard and VISA are treated as cash sales and these are directly recorded into the seller's bank. Purchase answer to view it. $5 Login/register for free and load your wallet instantly with $5 to buy and view this solution. View Solution
What is the nature of a credit memorandum issued by the seller of merchandise?
A credit memo is issued by the seller indicates the amount for which the buyer's account is to be credited (Accounts Receivable) and the reason for the sales return or allowance.
What distinguishes a merchandising business from a service business what is the difference?
The primary difference between a merchandising and a service-based business is the presence of inventory. Merchandising businesses sell goods to customer, whereas service-based businesses do not.
What distinguishes a retail business from a service business Why?
Merchandise-based businesses rely on the sale of tangible goods to make money. Service-based businesses, on the other hand, offer services such as legal consulting, landscaping or housekeeping as the main source of revenue. Service-based businesses measure results and time spent on a project as a basis for revenue.
Under which of the following situations does a business earn a gross profit but incur a net loss?
Under which of the following situations does a business earn a gross profit but incur a net loss? The cost of goods sold is subtracted from sales to arrive at gross profit.
What are the two types of transactions that are encountered in a merchandising business which are absent in purely service companies?
Merchandising transactions are separated into two categories: purchases and sales. In general, a purchase transaction occurs between a manufacturer and the merchandiser, also called a retailer. A sales transaction occurs between a customer and the merchandiser or retailer.
Is merchandise inventory a debit or credit?
debitMerchandise inventory is the account on a balance sheet that reflects the total amount paid for products that are yet to be sold. As a current asset, merchandise inventory is basically a holding account for inventory that's waiting to be sold. It has a normal debit balance, so debit increases and credit decreases.
What is the difference between a service business and a retail business?
Service business and Retail business: A service business may focus on providing various services to the customers and have no tangible products. On the other hand, the retail business aims at providing goods to the customers, which may be tangible.
How do you prepare an income statement for a service company?
How to Write an Income StatementPick a Reporting Period. ... Generate a Trial Balance Report. ... Calculate Your Revenue. ... Determine Cost of Goods Sold. ... Calculate the Gross Margin. ... Include Operating Expenses. ... Calculate Your Income. ... Include Income Taxes.More items...
What is merchandising type of business?
Merchandising Organizations A merchandising firm is one of the most common types of businesses. A merchandising firm is a business that purchases finished products and resells them to consumers. Consider your local grocery store or retail clothing store. Both of these are merchandising firms.
When a sale is made to a customer on credit?
Credit sales refer to a sale in which the amount owed will be paid at a later date. In other words, credit sales are purchases made by customers who do not render payment in full, in cash, at the time of purchase.
What are the two accounting elements that can be found in an income statement?
Revenues and expenses are included in the income statement. Changes in these elements are noted in the statement of cash flows.
Do small businesses have to keep inventory?
Generally, if you produce, purchase, or sell merchandise in your business, you must keep an inventory and use the accrual method for purchases and sales of merchandise. However, the following taxpayers can use the cash method of accounting even if they produce, purchase, or sell merchandise.
What is the difference between a service business and a merchandising business quizlet?
What's the difference between a merchandising business and a service business? Merchandising businesses purchase products from other businesses to sell them to customers. A service business provides services to customers rather than products.
What distinguishes a service business from the other types of business?
At the heart of it, the main difference is that a product business sells physical, tangible objects, whereas a service business provides value through intangible skills, expertise and time.
What is the difference between a service business and a retail business?
Service business and Retail business: A service business may focus on providing various services to the customers and have no tangible products. On the other hand, the retail business aims at providing goods to the customers, which may be tangible.
What is the difference between the accounting cycle of a service entity and a merchandising business?
A merchandising company determines its net income by subtracting both its operating expenses and its costs of goods sold from its revenue. While service companies can wait for months to see the revenues from their transactions, most merchandising companies realize their revenues immediately during the transaction.