Part A Topics:

1. IfI am the controller of Madison Square Garden and I receive $4,000 in tickets sales today for a Beyonc Concert that will take place in 6 months. How do we record the cash?
2. a. Why do major companies use accrual accounting? b. Do you think that the owner of the food stands on 45th and Fifth Avenue used accrual accounting or the other type of accounting? c. What is the other type of accounting?
3. What distinguishes a merchandising business from a service business? Give some examples.
4. Is a restaurant a service business or merchant, or is it an example of both?

Part B Topics:

1a. Discuss the concept of cost of goods sold. Why is it so important? What is the downside for you, as the owner of the company, not knowing what your cost of goods sold on an overall, product line and/or unit basis? Please explain.

1b. As the owner of your company, why are contribution margins and contribution margin ratios important to you? Why is the break-even point important to you? If your sales are below the break-even point, would you still keep your company open? Why or why not? If you closed your doors, would you still be responsible for the payment of your fixed expenses? List some of them and state the reason why.