ACC120 Lecture Notes - Lecture 7: Stamen, Income Statement, Debits And Credits

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Both service and sales businesses incur expenses, both types will buy items classed as ppe, both are likely to incur debt and pay it off. A merchandising business is any business that buys or sells products for the purpose of making a profit. Inventory is a collection of physical goods that a company has purchased or manufactured to sell to its customers. Inventory is listed on the balance sheet below accounts receivable, An expense account called cost of goods sols (cogs) is used to track the cost of the inventory that was sold during a particular period. The difference between sales revenue and cost of goods sold is. Gross profit sales revenue cost of goods sold. Gross profit is used to pay for all the expenses of the business. After expenses the remaining amount is net income. The perpetual inventory system updates levels after every purchase and sale.

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