Principles of Accounting Volume 1
19th Edition
ISBN: 9781947172685
Author: OpenStax
Publisher: OpenStax College
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Textbook Question
Chapter 1, Problem 9Q
Assume you are considering opening a retail business. You are trying to decide whether to have a traditional “brick-and-mortar” store or to sell only online. Explain how the activities and costs differ between these two retail arrangements.
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Explain some of the differences that make merchandising businesses and service businesses different from each other. The text below may help you. Use evidence from the text below to support your response.
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A service business sells its services for a fee. A merchandising business is a business that purchases goods and sells them. If you are selling those goods to the general public for use or consumption, your business is a retail merchandising business. Many of the transactions of a service business and a merchandising business are the same. You pay cash for supplies and buy on account, just like in a service business. However, transactions like these occur more often and include different elements to account for. For example, there is a lot more purchasing of goods on account to have an inventory to sell. Also, an asset account for all those purchases is needed. A merchandising business may have a much higher volume of sales and may have to charge sales tax depending on city,…
Merchandising businesses differ from service businesses. Explain some of the differences that make the businesses different from each other. Use evidence from the text below to support your response. For example, -In the text, it says," ___________________."
Read:
A service business sells its services for a fee. A merchandising business is a business that purchases goods and sells them. If you are selling those goods to the general public for use or consumption, your business is a retail merchandising business. Many of the transactions of a service business and a merchandising business are the same. You pay cash for supplies and buy on account, just like in a service business. However, transactions like these occur more often and include different elements to account for. For example, there is a lot more purchasing of goods on account to have an inventory to sell. Also, an asset account for all those purchases is needed. A merchandising business may have a much higher volume of…
From the following examples, select which one is a transaction.
a.
a seller receiving payment from a buyer while giving him the item he bought
b.
a buyer searching for information in the internet and his friends
c.
a girl window-shopping in a store for things she want to buy
d.
a shopper comparing products of different products in different stores
Chapter 1 Solutions
Principles of Accounting Volume 1
Ch. 1 - Accounting is sometimes called the language of...Ch. 1 - Financial accounting information ________. A....Ch. 1 - External users of financial accounting information...Ch. 1 - Which of the following groups would have access to...Ch. 1 - All of the following are examples of managerial...Ch. 1 - Which of the following is not true? A....Ch. 1 - The primary purpose of what type of business is to...Ch. 1 - Which of the following is not an example of a...Ch. 1 - A governmental agency can best be described by...Ch. 1 - Which of the following is likely not a type of...
Ch. 1 - Which of the following is not considered a...Ch. 1 - Stockholders can best be defined as which of the...Ch. 1 - Which of the following sell stock on an organized...Ch. 1 - All of the following are sustainable methods...Ch. 1 - The accounting information of a privately held...Ch. 1 - Which of the following skills/attributes is not a...Ch. 1 - Which of the following is typically required for...Ch. 1 - Typical accounting tasks include all of the...Ch. 1 - What type of organization primarily offers tax...Ch. 1 - Most states require 150 semester hours of college...Ch. 1 - Research your top five career choices. Identify...Ch. 1 - Using the same top five career choices, identify...Ch. 1 - Think about a recent purchase you made. Describe...Ch. 1 - Computerized accounting systems help businesses...Ch. 1 - The following information was taken from the...Ch. 1 - The following chart shows the price of Netflix...Ch. 1 - Use the internet to research one for-profit, one...Ch. 1 - Use the internet to research one manufacturing,...Ch. 1 - Assume you are considering opening a retail...Ch. 1 - Uber and Lyft are two popular ride-sharing...Ch. 1 - How would you categorize or classify a company...Ch. 1 - Charity Navigator...Ch. 1 - Use the internet to visit the Securities and...Ch. 1 - Imagine that you have just been elected president...Ch. 1 - According to a company press release, on January...Ch. 1 - The Dow Jones Industrial Average (DJIA) is often...Ch. 1 - Many professional certifications now have...Ch. 1 - The Certified Public Accountant (CPA) exam is a...
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- You have decided to open up a small convenience store in your hometown. As part of the initial set-up process, you need to determine whether to use a perpetual inventory system or a periodic inventory system. Write an evaluation paper comparing the perpetual and periodic inventory systems. Describe the benefits and challenges of each system as it relates to your industry and to your business size. Compare at least one example transaction using the perpetual and periodic inventory systems (a purchase transaction, for example). Research and describe the impact each system has on your financial statements. Decide which system would be the best fit for your business, and support your decision with research.arrow_forwardConduct research on a real-world retailers trade discounts and policies, and discuss the following questions. Which company did you choose? What do they sell? What is a trade discount? What products are subject to a trade discount? Describe the discount terms/program in detail. Give examples. Are there any restrictions? What incentive does this company have to give a trade discount? How does this discount benefit the buyer? If the buyer had to choose between receiving a trade discount or regular cash purchase discount, which would benefit them more? Why?arrow_forwardYou own a clothing store and use a periodic inventory system. Research like companies in the clothing industry and answer the following questions. Which inventory system is most used in clothing stores, periodic or perpetual? Why can periodic inventory reporting be a better approach to use than perpetual inventory reporting for this type of industry? What are some of the advantages and disadvantages to the periodic inventory method? What other types of businesses may use the periodic inventory method rather than the perpetual method?arrow_forward
- Saurez Company, your client, manufactures paint. The company’s president, Maria Saurez, has decided to open a retail store to sell Saurez paint as well as wallpaper and other supplies that would be purchased from other suppliers. She has asked you for information about the conventional retail method of pricing inventories at the retail store. Instructions Prepare a report to the president explaining the retail method of pricing inventories. Your report should include the following points. a. Description and accounting features of the method. b. The conditions that may distort the results under the method. c. A comparison of the advantages of using the retail method with those of using cost methods of inventory pricing. d. The accounting theory underlying the treatment of net markdowns and net markups under the method.arrow_forwardWhy should you visit shops to buy fresh produce rather than purchasing it via online stores?arrow_forwardWhich of the following is not an example of a retailer? A. electronics store B. grocery store C. car dealership D. computer manufacturer E. jewelry storearrow_forward
- What are some benefits to a retailer for offering a discount to a customer?arrow_forwardIf you are a jewelry store, what inventory system is applicable to you? How about for a hardware store? Explain your answers.arrow_forwardCase scenario: You are a newly hired accountant for Sushi Beeber, Inc., a retail company specializing in apparel for small pets. The company would like to expand its apparel line to include sweaters for cats. Sushi Beeber has found several manufacturers that offer competitive prices to ensure cost of goods sold is low. Because the company receives merchandise from different manufacturers and the cat sweaters will be commoditized, the company needs to develop an internal accounting system to keep track of inventory cost. You think that the weighted average cost method may help the company stay up-to-date with the inventory cost as purchase cost changes over time. Your task is to create a spreadsheet that can calculate the inventory cost based on purchases and sales for the month. SEE ATTACHED for Numbers Find the inventory total cost and weighted average cost for the month, i.e., all of the records of data. Enter values for the next eight rows, Row 3 through 10, in the table below. Do…arrow_forward
- If you are the seller will you provide discount for customers? Why or why not? What type of discount will you provide for your customers? How will you account for this discount? Answer this by giving a sample problem including the debit and credit entries. If you are the buyer, will you get discounts for your suppliers? Why or why not?arrow_forwardWhich of the following will be called as a Merchandising Business? a. Receives a loan from bank b. Earns net income by buying goods only c. Earns profits from commission only d. Earns net income by buying and selling merchandisearrow_forwardWould you use a rent-to-own store? Why or why not?arrow_forward
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