One of Your Friends Is Preparing to Open a Store

question 119

Essay

One of your friends is preparing to open a store that will sell outdoor gear.When you heard that the business would have three or four employees,you told your friend that she would need to pay careful attention to separation of duties.She has asked you to explain what duties should be separated and why separation of duties is important in a business.Write a note to your friend explaining these issues.

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Definitions:

Recording Purchases

The process of documenting the acquisition of goods or services in the financial records of an entity, impacting its inventory or expense accounts.

Periodic Inventory System

An accounting method that updates inventory levels and cost of goods sold at the end of an accounting period, not continuously.

Merchandise Inventory

The goods or products that a retailer or wholesaler intends to sell to customers for a profit.

Purchase Discounts

Reductions in the cost price of goods or services that are offered to purchasers when they pay within a specified period or meet certain conditions, aimed at encouraging prompt payment.