What Is the First Step in the Accounting Cycle for a Merchandising

question 162

Multiple Choice

What is the first step in the accounting cycle for a merchandising company?

• A) The company sells inventory to customers, creating accounts receivable.
• B) The company collects cash.
• C) The company buys inventory.
• D) The company delivers inventory to customers.

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Definitions:

Consolidated Net Income

The total earnings of a corporation, after tax, including earnings from subsidiaries, before distributing dividends.

Cost Method

An accounting approach where investments are recorded at their acquisition cost, without adjustment for increases or decreases in market value.

Goodwill

An intangible asset arising when a company acquires another for more than the fair value of its net identifiable assets.

Retained Earnings

Profits that a company has earned to date, less any dividends or other distributions paid to investors.