Final answer:
To calculate the merchandise balance, track all inventory and sales transactions. The current account balance represents the financial state of a company's transaction account. The example on accounting profit shows that by subtracting all expenses from the revenue, we deduce an accounting profit of $50,000.
Step-by-step explanation:
Accounting Principles for Merchandise and Current Account Balances
To calculate the merchandise balance, you need to compile all the transactions related to the buying and selling of goods. This includes the starting inventory, plus any additional purchases during the period, minus the cost of goods sold (COGS). The formula to calculate merchandise balance is: Beginning Inventory + Net Purchases - COGS.
For the current account balance, this typically reflects the amount of money in a company's checking or transaction account at a given point in time. It is computed by considering the beginning cash balance, adding all cash inflows, and subtracting all cash outflows.
To answer the self-check question on a firm's accounting profit: Accounting profit is calculated by subtracting the total expenses from the sales revenue. In the given example, the firm's accounting profit can be calculated as $1,000,000 (sales revenue) - $600,000 (labor) - $150,000 (capital) - $200,000 (materials) = $50,000.
When discussing the hypothetical Singleton Bank, the key aspect is the T-account balance sheet. For a bank, a T-account helps in illustrating the financial position, showing on one side the deposits, which are liabilities, and on the other side, the loans or other assets.