Sutton Hills Company’s management made the decisions that follow. Indicate which of the decisions relates primarily to
(a) Classification,
(b) Merchandising inventory,
(c) Periodic inventory system,
(d) Operating cycle.
1. Decided to purchase and sell goods.
2. Decided to use a form of income statement that would show gross margin separately from operating income.
3. Decided to reduce the credit terms offered to customers from 30 days to 20 days to speed up collection of accounts.
4. Decided that the benefits of keeping track of each item of inventory as it is bought and sold would exceed the costs of such a system.