Determine the uses of the cash receipts journal and describe how it is structured internally in QuickBooks.
Explain the concept of sales discounts and how they are recorded and applied in manual accounting and in QuickBooks.
Explain the presentation of the multistep income statement of a merchandising company depicting Cost of Sales as a schedule and using the periodic inventory system.
Understand the differences between a perpetual and periodic inventory system in the presentation of the income statement by QuickBooks.
This is the final chapter discussion of the special-purpose journals used by merchandising companies. To increase the volume of sales transactions, businesses allow credit sales, but sales for cash are always a preference. Companies can choose to sell only to cash customers, but doing so will limit their sales volume and affect their growth in the industry. As a general rule, the ratio of a high inventory turnover will yield a greater profit for the business. Though cash sales transactions set their own boundaries, credit sales also have their disadvantages. As indicated in Chapter 8, losses on uncollectible accounts are always incurred no matter how tough the credit and collection policies are. Careful record keeping of customers’ accounts must be maintained as a check and balance to the Accounts Receivable general ledger. Collections of the Accounts Receivable must be properly accounted for to safeguard company assets and minimize unexpected costs.