FIN. ACCT. CUSTOM F17 BUNDLE
FIN. ACCT. CUSTOM F17 BUNDLE
8th Edition
ISBN: 9781119463504
Author: Kimmel
Publisher: WILEY C
Question
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Chapter 5, Problem 1Q

(a)

To determine

Accounting cycle refers to the process of recording, posting, and preparing financial statements of a company. It shows the processing of the financial transactions in sequence that starts from occurrence of the transactions and ends with the preparation of financial statements.

To Explain: Whether the steps in accounting cycle for a merchandising company differs from the steps in the accounting cycle for a service company.

(a)

Expert Solution
Check Mark

Answer to Problem 1Q

No, the steps in accounting cycle for a merchandising company does not differ from the steps in the accounting cycle for a service company.

Explanation of Solution

The steps in the accounting cycle that is same for both Merchandise Company, and Service Company are stated below:

  • Analyze and record transactions in the journal.
  • Post the journals entries to the ledger (T-accounts).
  • Prepare a trial balance.
  • Prepare financial statements.
  • Prepare closing entries.

 (b)

To determine

To Explain: Whether the measurement of net income in a merchandising company conceptually the same as in a service company.

 (b)

Expert Solution
Check Mark

Answer to Problem 1Q

Yes, the measurement of net income in a merchandising company is conceptually same as in a service company.

Explanation of Solution

The net income in both the companies is derived by deducting all the expenses from the total revenue earned during a year.

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Students have asked these similar questions
"Do the steps in the accounting cycle for a merchandising company differs from the steps in the accounting cycle for a service company?" Is the measurement of net income in a merchandising company conceptually the same  as in a service company?
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When a merchandising business is compared to a service business, the financialstatement thatis notaffected by that change is the Statement of Owner'sEquity. True or False?

Chapter 5 Solutions

FIN. ACCT. CUSTOM F17 BUNDLE

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