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Topic: History
Number of pages / Number of words: 11 / 2880
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The difference between revenue received (2,300) and cost of goods (1,500) represents gross profit (or gross margin). It also represents the increase in retained earnings (net income) as a direct result of the sale. Note that we could have entered two transactions—one increasing cash and sales by 2,300 each and one decreasing inventory and increasing the expense account cost of goods sold by 1,500 each...

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Note that the entry for a credit sale does not differ with respect to retained earnings. That is, sales transactions are recorded when they are incurred—whether the cash in collected at that time or in the future.

4. The insurance policy is expected to benefit future periods. Therefore, it is recorded as an asset...

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