1.Describe the important differences between accrual and cash basis accounting and explain why you think that most companies use accrual-basis accounting.
2.Accountants prepare adjusting journal entries for four different types of events and transactions. For example, one type of adjusting journal entry is used to record revenue earned but not yet recorded. What three other types of adjusting entries are made by accountants?
3.Explain why you think that companies prepare closing entries at the end of an accounting period.
4.An accountant asserted that reversing entries should always be prepared for all adjusting journal entries that were prepared. Do you agree or disagree with the accountant? Why?
5.Managers in merchandising firms place a great deal of importance on the management of their gross margin. Describe what gross margin is and why its management or control is so important in merchandising firms.
6.Assume that you are going to open a new hobby store that specializes in model trains and radio controlled model airplanes. Would you use a periodic or perpetual inventory system in your new business? Why?