ACC 100 Chapter Notes - Chapter 5: Income Statement, Perpetual Inventory, Current Asset
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13 Oct 2016
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Merchandising businesses are businesses that both buy and sell inventory. They use multiple step income statements compared to businesses that provide only a service who use single step income statements. Multiple step income statements provide additional details so that external users can make informed decisions. A service main source of revenue is providing a service to their customer, such as fedex or bank of montreal, whereas merchandising businesses both buy and sell inventory. A gdp which stands for growth domestic product, is a measure of how fast the e(cid:272)o(cid:374)o(cid:373)(cid:455) is gro(cid:449)i(cid:374)g a(cid:374)d it"s a(cid:374) i(cid:374)di(cid:272)ator of the e(cid:272)o(cid:374)o(cid:373)i(cid:272) health of the country. Personal consumption is what drives the gdp growth. Inventory is finished goods that merchandiser buy to resell to customers. It"s a(cid:374) asset (cid:271)e(cid:272)ause the (cid:272)o(cid:373)pa(cid:374)(cid:455) o(cid:449)(cid:374)s it a(cid:374)d it has future (cid:271)e(cid:374)efit. It"s a (cid:272)urre(cid:374)t asset (cid:271)e(cid:272)ause it"ll (cid:271)e sold in less than a year or operating cycle.