15. Name two ways of treating cash discounts in the ledger, based on your answer to the previous question.
16. Illustrate two methods of entering cash discounts allowed in the cash book; illustrate the customer's ledger account as it would appear after posting the credit, from each of these entries. Which method, in your opinion, most clearly shows how the account was settled?
17. Should cash discounts earned be credited against the cost of goods purchased, or credited to profits? Why?
18. What is a profit and loss account? What does the balance of this account represent? How frequently is the balance of profit and loss account transferred? To what accounts, in a proprietorship or partnership? in a corporation?
19. What is a trading account, and what is its purpose? With what classes of items should trading account be debited and credited? How is the trading account constructed?
20. What is meant by the turnover? How can the amount of the turnover be shown in the trading account?
21. What is a manufacturing account, and of what items is it made up? What does the balance of the manufacturing account represent?
22. What is a merchandise inventory account, and when and for what purpose is it used? When are the books said to be closed?
23. What is a balance sheet? In what order should the asset and liability accounts be listed on the balance sheet?