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In comparing the accounts of a merchandising company with those of a service company , what additional accounts would the merchandising company likely use, assuming

  1. In comparing the accounts of amerchandising companywith those of aservice company, what additional accounts would the merchandising company likely use, assuming it employs a perpetual inventory system? When listing the account names, indicate if it appears on theIncome Statementor on theBalance Sheet.
  2. Explain how a business can earn apositive gross profiton its sales and stillhave a net loss.
  3. Distinguish betweencash discountsandtrade discounts. Is the amount of a trade discount on purchased merchandise recorded in the accounts?
  4. Explain asales discountand apurchase discount.
  5. Which party (buyer/seller) records aDebit memorandumand which party (buyer/seller) records aCredit memorandum? Does the maker of a debit memorandum record a debit or a credit in the recipient's account? What entry (debit or credit) does the recipient record?
  6. Explain the difference between thesingle-stepandmultiple-stepincome statement formats. Which format contains a line item showingGross Profit?

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