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The Complete Idiot's Guide® To Accounting by Lita Epstein, Shellie L. Moore

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Recording Purchases

We all know the impact on our monthly budgets when prices go up for items we need. When gas prices shoot up, or the cost of basic foods increases, we notice and set aside more money for gas and grocery shopping. If you are running a small business, you need to watch for any change in the prices of the products you sell and adjust your prices accordingly.
The first step in the process is to record the purchase of new inventory accurately and quickly. If you are operating a retail outlet, your inventory consists of finished goods ready for sale. The recording process involves two accounts in the chart of accounts: the Purchases account, which is on the profit and loss (P&L) statement directly after the sales accounts, and ...

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