Chapter 5: Handout for Student Notes 1. What are merchandising operations? The operating cycle of a merchandising business Merchandise inventory systems: Perpetual and periodic inventory systems 2.How are purchases of merchandise inventory recorded in a perpetual inventory system? o Purchase of merchandise inventory Purchase discounts Purchase returns and allowances o Transportation costs Freight in Freight in within discount period o Cost of inventory purchased 3.How are sales of merchandise inventory recorded in a perpetual inventory system? O Cash and credit card sales O Sales on account Sales discounts o Sales returns and allowances Estimating sales returns . Actual return of inventory Sales allowance I o Transportation costs Freight out 21 S2 o Transportation costs-Freight out 4. What are the adjusting and closing entries for a merchandising business? Adjusting merchandise inventory based on a physical count o Closing the accounts of a merchandiser 5.How are a merchandiser's financial statements prepared? I Income statement Single-step income statement Multi-step income statement Statement of retained earnings and the balance sheet 21 o Statement of retained earnings and the balance sheet 6. How do we use the gross profit percentage to evaluate business performance? 7.How are multiple performance obligations recorded in a perpetual inventory system? (Appendix 5A) 8.How are merchandise inventory transactions recorded in a periodic inventory system? (Appendix 5B) o Purchases of merchandise inventory Recording purchase returns and allowances . Recording transportation costs o Sale of merchandise inventory I Preparing financial statements Adjusting and closing entries I need every definition for each line, every single word please