| A | B |
|---|
| Merchandising Firm | Main source of revenue is sale of mdse; Expenses in two categories—COGS and Operating Expenses |
| Service Firm | Main source of revenue is sale of services |
| Net Sales | Sales - Sales Returns/Allowances - Sales Discounts |
| Perpetual System Advantages | advantages—current information on inventory and costs resulting in better control |
| Periodic System Advantages | simple and may be appropriate for a small business |
| Perpetual System Disadvantages | cost, complexity (though this has been reduced with automation) |
| Periodic System Disadvantages | don’t have current information until the end of the period |
| Periodic System Physical Inventory | Essential for determining EI and computing COGS |
| Perpetual System Physical Inventory | Control device; inventory is updated continually Useful for detecting inventory losses |
| Gross Profit Ratio | GP/Net Sales |
| Profit Margin | NI/Net Sales |
| Return on Assets | NI/Average Total Assets |
