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About this document
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- 107 pages
- Price
- $45 one-time, yours to keep
- Membership
- Included in every plan
- Format
- Subject
- Accounting, Business Management
- Module
- 06
This document is a set of multiple choice questions on merchandising accounting. It covers the differences between service and retail businesses, inventory systems, and credit card sales. It is useful for students studying accounting and business management.
What's inside
- Service vs retail businesses
- Inventory systems
- Cost of merchandise sold
- Credit card sales
- Financial statements
- Inventory accounting
Who it is for: Students studying accounting and business management. (Undergraduate)
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Summary
Merchandising accounting involves tracking the cost of goods sold and managing inventory. Students learn to distinguish between service and retail businesses, and understand how to record transactions in different inventory systems.
Service vs Retail Businesses
Service businesses provide services for income. Retail businesses sell merchandise. They differ in their operating cycles and financial statements.
Income Calculation in Merchandising
Sales minus cost of merchandise sold and operating expenses give net income. Gross profit is the difference between sales revenue and cost of merchandise sold.
Inventory Systems
The perpetual inventory system continuously updates inventory records. The periodic inventory system updates records at the end of the accounting period.
Recording Transactions
Journal entries record the receipt of inventory and sales. Freight in is a cost of purchasing inventory. Credit terms affect the amount paid for invoices.
Key terms
- Cost of merchandise sold
- The amount a merchandising company pays for the goods it sells.
- Gross profit
- Net revenue from sales minus cost of merchandise sold.
- Perpetual inventory system
- An inventory system that continuously updates records.
- Periodic inventory system
- An inventory system that updates records at the end of the accounting period.
- Freight in
- The cost paid by the company to receive merchandise.
- FOB shipping point
- Shipping terms where ownership passes to the buyer when the seller delivers the merchandise to the freight carrier.
Questions this document helps with
- What is the difference between service and retail businesses?
- How do you calculate net income in a merchandising business?
- What are the main features of a perpetual inventory system?
Summary written with AI from the document's text.
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