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In this class we learned to define merchandising operations, compare the two types of merchandise inventory systems, illustrate accounting procedures in a perpetual inventory


 

In this class we learned to define merchandising operations, compare the two types of merchandise inventory systems, illustrate accounting procedures in a perpetual inventory system, illustrate accounting for merchandise inventory, prepare financial statements for a merchandiser, and evaluate business performance through financial statement and ratio analysis. Let's extend the discussion by examining the practical implications of these concepts. Why are sales discounts and sales returns and allowances recorded in contra revenue accounts instead of directly in the Sales account? Please explain.

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