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The periodic inventory system requires updating the inventory account only at the end of the period to reflect the quantity and cost of goods available for sale and the cost of goods sold.

A periodic inventory system requires updating of the inventory account only at the beginning of an accounting period.

Cash equivalents:

Sellers generally prefer to receive notes receivable rather than accounts receivable when the credit period is long and the receivable is for a large amount.

Spencer Co. decides to establish a petty cash fund with a beginning balance of $200. The company decides that any purchase under $25 can be processed through petty cash instead of the voucher system. The journal entry to record establishing the account is:

Purchase discounts are the same as trade discounts.

A purchase order is a document the purchasing department sends to the vendor to place an order.

The acid-test ratio:

Cushman Company had $800,000 in sales, sales discounts of $12,000, sales returns and allowances of $18,000, cost of goods sold of $380,000, and $275,000 in operating expenses. Net income equals:

A high accounts receivable turnover in comparison with competitors suggests that the firm should tighten its credit policy.