Merchandisers Flashcards
(28 cards)
Merchandisers
Business that sell a product are called merchandiser cause they sell goods, merchandise to the customers.
What is inventory?
the merchandise that a company holds for sale to customers.
What does merchandising consists of?
It consists of buying and selling products instead of services
What does merchandising have in balance sheet?
inventory; an asset
What does merchandising have in income statement?
- sales revenue
- cost of goods sold, an expense
Explain the operating cycle of merchandising business.
- it begins when the company purchases inventory from a vendor.
- The company then sells the inventory to the customer
- Finally, the company collects the cash from the customer.
What are the main types of inventory accounting systems?
- Periodic system
2. Perpetual system.
What is periodic system used for?
used for inexpensive goods.
to determine the quantities
What is perceptual inventory system?
It keeps a running computerized record of inventory. that is constantly updated.
What does a perceptual inventory keep record of?
- Units purchased and cost amount
- Units sold and sales and cost amount
- The quantity of inventory on hand and its cost
What is purchase discount?
business that offer customers discount for early paymentn
what is purchase return?
business that allows customers to return merchandise that is defective, damaged, or unsuitable.
What is purchase allowance?
granted to the purchasers as incentive to keep goods that are not as ordered
What does purchase allowance and return do?
decrease the buyer’s cost of inventory
FOB
Free on Board
What does FOB shipping point mean?
the buyer takers the ownership to the goods at the shipping point. Buyers pays for the shipping cost.
Freight in
the buyer owns the goods while they are in transit, so the buyer buys the freight.
Freight out
the expense paid by the seller.
Sales revenue
the amount a business earns from selling a merchandise inventory is called Sales revenue.
Formula for net cost of inventory
net cost of inventory = inventory - purchase returns and allowances - purchase discounts + freight in
What decreases the revenue?
sales return and allowances, sales discount.
Net sales revenue
sales revenue - sales return + allowances - sales discount
What are the key elements of profitability?
net sales revenue, cost of goods sold, gross profit
Gross profit formula?
net sales revenue - cost of goods sold
