Merchandise Concepts

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Merchandise Concepts
AGRICULUTURAL TECHNICAL INSTITUTEBUS TEC T101
ACCOUNTING

• Chapter 5 - Pt 1

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ACCOUNTING CONCEPTS

• CH 1 ACCT THE BUS ENVIRONMENT
• CH 2 RECORDING TRANSACTIONS
• CH 3 MEASURING INCOME ADJUSTMENTS
• CH 4 COMPLETING THE ACCTING CYCLE
• CH 5 MERCHANDISE OPERATIONS
• CH 6 SPECIAL JOURNALS
• CH 7 CONTROLLING CASH
• CH 8 RECEIVABLES
• CH 9 MERCHANDISE INVENTORY
• CH 10 PAYROLL
• CH 17 CASH FLOW
• APPENDIX C INCOME TAX

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LEARNING OBJECTIVES
CH 5 MERCHANDISE OPERATIONS

• AFTER COMPLETING THIS LESSON, THE STUDENT SHOULD
  BE ABLE TO
• 1.

Understand Merchandising Concepts
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Classification of Businesses
Understand Merchandising Concepts
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OBJ
SERVICE
MERCHANDISE
BOTH MECHANDISE SERVICE
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Understand Merchandising Concepts
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OBJ
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SERVICE
MERCHANDISE
SIMILARITIES
SAME BASIC ACCOUNTS
SAME BASIC PROCEDURES
DIFFERENCES
INVENTORY OF GDS
COST OF GDS SOLD
DISCOUNTS
PRODUCT RETURN
MULTI STEP INC ST
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Understand Merchandising Concepts
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OBJ
SERVICE
MERCHANDISE
Income Statement
Service Revenue
Sales Revenue
- Oper Expenses
- COST OF GDS SOLD
GROSS PROFIT
Net Income
- Oper Expenses
Net Income
Balance Sheet
Current Assets
Current Assets
Cash
Cash
Acct Rec
Acct Rec
Pre-Paids
Pre-Paids
INVENTORY OF GDS
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Understand Merchandising Concepts
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OBJ
MERCHANDISE ACCOUNTING
1. What?
Accounting for the buying/selling of products
2. Why?
Majority of businesses sell products
3. When?
When items are bought or sold
4. Who?
If large enough, special accountants for accounts
receivable accounts payable
General Journal and Ledger
5. Where?
Special Journals Subsidiary Ledger
Procedures associated with buying selling
products
6. How?
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Operating Cycle of a Merchandising Business
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Understand Merchandising Concepts
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OBJ
Purchase and Cash Sale
Purchase and Sale on Account
Cash
Cash
Collections o f Cash
Purchases
Purchases
Cash Sales
Inventory
Accounts Receivable
Sales on Account
Inventory
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I. CONCEPT OF INVENTORY
Understand Merchandising Concepts
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OBJ

• A. NOUN LIST OF ASSETS
• 1. CURRENT SHORT TERM
• 2. Plant LONG TERM
• B. VERB PROCESS OF LISTING ASSETS
• 1. PHYSICAL COUNT
• a. WHEN
• b. HOW

2. VALUATION (HOW)
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II. DEFINITION
Understand Merchandising Concepts
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OBJ

• AN INVENTORY IS...
• ... A DETAILED LISTING OF

... PHYSICAL ASSETS
... WITH A EST VALUE
... AT A POINT IN TIME
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III. NEED FOR INVENTORY
Understand Merchandising Concepts
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OBJ

• A. MANAGEMENT USE
• 1. AVAILABLE RESOURCES
• 2. BASIS FOR PLANNING
• B. OTHER USE

1. INSURANCE CLAIMS
C. CREDIT USE
1. INFO FOR BAL SHEET Loan Ap
D. TAX USE
1. CACULATE DEPRECIATION 2. CAPITAL GAINS
LOSSES
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IV. INVENTORY SYSTEMS
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Understand Merchandising Concepts
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OBJ

• A. PERTPETUAL
• 1. CONTINOUS RECORDS OF -S

Keeps a running record of goods
Perpetual
Physical count at least once a yr
Used for expensive items/all
Autos, Jewelry, Furniture
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Understand Merchandising Concepts
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OBJ
B. PERIODIC

• 1. -S COUNTED _at_ A POINT IN TIME

Not a running record of goods
Periodic
Physical count at least once a yr
Used for inexpensive items
Groceries, Office Supplies, Dept Stores
Used To Check Perpetual
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IS THIS YOUR ATTITUDE?
Understand Merchandising Concepts
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OBJ
Chris Browne. Wooster Daily Record. April 17,
1993
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Understand Merchandising Concepts
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OBJ
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2. HOW
a. TWO PEOPLE
b. CLIPBOARD/SCANNER

• c. PROCESS
• 1. COUNT, 2. ESTIMATE, 3. RECORD

3. WHEN a. END OF FISCAL YR b. SAME TIME
EACH YR
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SUMMARY
CH 5 MERCHANDISE OPERATIONS
1. Merchandise firms use the same basic
accounting procedures but need some additional
ones to deal with inventory
2. Inventory can be the list of assets or the
process of listing the assets.
3. Perpetual Inventory keeps a running record of
inventory while periodic inventory involves the
counting of items at a point in time.
3. Inventory is used for management, credit,
insurance, and other uses.
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Merchandise Transactions
NEXT TOPIC

• Chapter 5 - Pt 2