1.Identify the contra accounts that have normal debit balances and explain why they are not considered expenses.

2.What are the journal entries a merchandising organization would use to record the purchase and subsequent sale of merchandise? How would these transactions differ with a periodic versus a perpetual inventory system?

3.Describe the five amounts not shown on a service companys income statement. Identify and briefly explain the five unique amounts.

4.In your opinion, why are perpetual inventory systems so much more popular today than in the early 1960's and earlier? Why would a company employing a perpetual inventory system still take a physical inventory periodically?

5.What are the three different inventory cost-flow assumptions commonly used in commerce today and allowed by generally accepted accounting principles?

6.In a period of increasing prices, why would the company tax accountant prefer the last in, first out method while the CEO would prefer first in, first out? Why is this important?