![Financial & Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9780078025778/9780078025778_largeCoverImage.gif)
Identify the correct statements.
![Check Mark](/static/check-mark.png)
Answer to Problem 1STQ
Option (a), (b), and (d) are correct answer.
Option (a): The appliance store has a longer operating cycle than the restaurant.
Option (b): The appliance store probably uses a perpetual inventory system, whereas the restaurant probably uses a periodic system.
Option (c): Both businesses probably have subsidiary ledgers for accounts payable.
Explanation of Solution
Option (a): Generally the merchandising company will have the longer operating cycle, as it have the receivables and inventory. But, the restaurants will not have the receivables. Thus, the appliance store has the longer operating cycle. Hence, Option (a) is correct answer.
Option (b): As the appliance store will deals with the huge number of inventory and receivables, it is necessary to keep the up to date records of the inventory or cost of goods sold, thus it is using perpetual inventory system. In restaurants, it is not necessary to keep the up to date information and there is no such inventories and receivables, thus it is using periodic inventory system. Thus, Option (b) is correct answer.
Option (c): It is not mandatory that both the businesses would require subsidiary ledgers for
Option (d): It is probable that both the business will have subsidiary ledger for accounts payable as the company will purchase the goods from the vendors for credit. Thus, option (d) is the correct answer.
As per the above explanation, Option (c) is not correct answer. Hence, Option (a), (b), and (d) are correct answer.
Thus, Option (a), (b), and (d) are correct answer.
Want to see more full solutions like this?
Chapter 6 Solutions
Financial & Managerial Accounting
- We note the following adjusted trial balance totals: Cash $ 21,000 Accounts Receivable $ 20,000 Allowance for Doubtful Accounts $2,000 Merchandise Inventory $ 20,000 Accounts Payable $16,000 Capital $ 3,000 Sales Sales Returns Cost of Goods Sold Other Expenses Gross profit is: a. $56,000 b. $50,000 c. $80,000 d. $74,000 $ 80,000 $ 6,000 $ 24,000 $ 10,000arrow_forwardcorrect answer please general accountingarrow_forwardSolution want to this general account questionsarrow_forward
- Abbey Co. sold merchandise to Gomez Co. on account, $35,000, terms 2/15, net 45. The cost of the merchandise sold was $24,500. Abbey Co. issued a credit memo for $3,600 of undiscounted merchandise returned which originally cost $1,700. Gomez Co. paid the invoice within the discount period. What is the amount of gross profit earned by Abbey Co. on the above transactions? A. $10,500 B. $30,772 C. $7,972 D. $31,400arrow_forwardans plzarrow_forwardWeight average method would bearrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
![Text book image](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)