A Merchandiser Frequently Has a Need to Use Contra Accounts

question 103

Essay

A merchandiser frequently has a need to use contra accounts related to the sale of goods. Identify the contra accounts that have normal debit balances and explain why they are not considered expenses.

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Definitions:

Taxes

Compulsory contributions to state revenue, levied by the government on workers' income and business profits or added to the cost of some goods, services, and transactions.

Automatic Stabilizers

Economic policies and programs, like unemployment benefits and progressive taxation, that automatically help stabilize an economy by decreasing the effects of economic fluctuations.

Aggregate Demand

Aggregate requirement for goods and services within an economic system, evaluated at a fixed comprehensive price level over a defined period.

National Debt

The total amount of money that a country's government has borrowed, by various means, to cover its spending in excess of tax revenues.