tailieunhanh - Lecture Fundamental accounting principles - Chapter 5: Accounting for merchandising operations

After studying this chapter you will be able to understand: Describe a merchandiser’s cost of goods sold, how do we compute gross profit for a merchandising company? Explain why use of the perpetual inventory system has dramatically increased; identify which items are subtracted from the list amount and not recorded when computing purchase price: freight-in, trade discount, purchase discount, purchase return;. | Accounting for Merchandising Operations Chapter 5 PowerPoint Editor: Beth Kane, MBA, CPA Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Chapter 5: Accounting for Merchandising Operations 05-C1: Merchandising Activities 2 Service organizations sell time to earn revenue. Examples: Accounting firms, law firms, and plumbing services Service Companies C 1 3 Previous chapters emphasized the accounting and reporting activities of service companies. A merchandising company’s activities differ from those of a service company. Merchandise consists of products, also called goods, that a company acquires to resell to customers. Manufacturer Wholesaler Retailer Consumers Merchandising Companies Merchandiser C 1 4 A merchandiser earns net income by buying and selling merchandise. Merchandisers are often identified as either wholesalers or retailers. A wholesaler is an intermediary that buys products from manufacturers or other wholesalers and sells them to retailers or other wholesalers. A retailer is an intermediary that buys products from manufacturers or wholesalers and sells them to consumers. Many retailers sell both products and services. C 1 Reporting Income for a Merchandiser Merchandising companies sell products to earn revenue. Examples: sporting goods, clothing, and auto parts stores 5 Net income for a merchandiser equals revenues from selling merchandise minus both the cost of merchandise sold to customers and the cost of other expenses for the period. The usual accounting term for revenues from selling merchandise is sales, and the term used for the expense of buying and preparing the merchandise is cost of goods sold. (Some service companies use the term sales instead of revenues; and cost of goods sold is also called cost of sales.) The income statement for Z-Mart illustrates these key components of a merchandiser’s net income. The first two lines show | Accounting for Merchandising Operations Chapter 5 PowerPoint Editor: Beth Kane, MBA, CPA Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Chapter 5: Accounting for Merchandising Operations 05-C1: Merchandising Activities 2 Service organizations sell time to earn revenue. Examples: Accounting firms, law firms, and plumbing services Service Companies C 1 3 Previous chapters emphasized the accounting and reporting activities of service companies. A merchandising company’s activities differ from those of a service company. Merchandise consists of products, also called goods, that a company acquires to resell to customers. Manufacturer Wholesaler Retailer Consumers Merchandising Companies Merchandiser C 1 4 A merchandiser earns net income by buying and selling merchandise. Merchandisers are often identified as either wholesalers or retailers. A wholesaler is an intermediary that .