1. Describe the difference between a service and merchandising firm. Give an example of each from publicly traded companies.

2. Give a detailed example of the recording of purchases under a perpetual inventory system including returns, allowances and discounts.

3.  Give a detailed example of recording sales revenues under a periodic inventory system including returns, allowances and discounts.

4.  What are the differences between a single-step and a multiple-step income statement?

5.  Give an example of how to calculate the cost of goods sold under a periodic inventory system. Show all relevant accounts.

6.  Explain how the gross profit rate and the profit margin are computed.