Accounting - Test 2

Buy and sell merchandise as their primary source of revenue.

Merchandisers that purchase and sell directly to consumers.

Merchandisers that sell to retailers

Sale of merchandise = sales revenues/sales

Cost of goods sold = the total cost of merch sold during the pd operating expenses = day to day business expenses

Sales revenue - cost of goods sold = gross profit gross profit - operating expenses = net income

Longer than that of a service firm because of the purchases and sale of merch inventory.

Beginning inventory is added to the cost of goods purchased, yeilding cost of goods available for sale. These available goods are either sold (cost of goods sold) or left on hand for future sales (ending inventory)

Perpetual inventory and periodic inventory system

Detailed records of the cost of each inventory purchase and sale are maintained -cost of goods sold is determined each time a sale occurs -better inventory control

Detailed records are not kept throughout the pd. cost of goods sold is determined only at the endof the accounting pd

Recorded when the goods are received from the seller -recorded by a debit to merch inventory and a credit to cash/ accounts payable.

Purchase return - goods are returned to the seller purchase allowance- purchasers keeps the merch but is granted an allowance (deduction) by sellers

Debiting cash/accounts payable and crediting merch inventory

The transportation of the merch.