A Chart of Accounts for a Merchandising Business

question 33

Multiple Choice

A chart of accounts for a merchandising business

• A) usually is the same as the chart of accounts for a service business
• B) usually requires more accounts than does the chart of accounts for a service business
• C) usually is standardized by the FASB for all merchandising businesses
• D) always uses a three-digit numbering system

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Definitions:

Compounded Quarterly

The method of calculating interest where the interest is added to the principal amount four times a year.

Present Value

The current evaluation of a future sum of money or chain of cash inflows, when calculated at an explicit rate of return.

Compounded Semiannually

Compounded Semiannually refers to the process of applying interest to both the initial principal and accumulated interest of a deposit or loan on a twice-yearly basis.

Present Value

The today's price of a future amount of money or streams of cash inflow, under a specified yield rate.