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- Define merchandising companies.
- Describe the items that make up merchandising inventory.
- Discuss the different types of inventory cost.
- Explain the accounting procedures for inventory purchases.
- Differentiate between perpetual and periodic inventory systems.
- Use a perpetual system to record purchases.
- Explain the accounting procedures for inventory sales.
- Use a perpetual system to record sales.
- Learn how to reconcile bank accounts after purchases or sales.
- Describe the different methods for inventory counting.
- Take a look at different inventory valuation methods.
- Explain why it is important to evaluate the level of inventory.
- Learn how costing methods are affected by financial statements.
- Understand how inventory errors affect current and future financial statements.
- Describe how to use the net realizable value of inventory.
- Discuss the use of lower of cost or market of inventory.
1. Merchandising Company: Definition, Activities & Income Components
Do you know what a merchandising company is? If you said it's a store, you are right. It is a store, but it is also so much more. In this lesson, we are going to discuss some of the major components of a merchandising company.
2. Items that Make Up Merchandise Inventory
In order to operate, merchandising companies must carry inventory. What exactly makes up merchandise inventory? In this lesson, you will not only learn the answer to that question, but also several other important factors that relate to merchandise inventory.
3. Inventory Cost: Definition, Methods & Types
Have you ever thought about how much it costs a business to keep inventory in stock? It's not just the price the business pays for the items that it keeps in stock. It is so much more. In this lesson, we will discuss exactly what constitutes actual inventory cost.
4. Accounting for Inventory Purchases
A merchandising company must purchase inventory, and it has to be accounted for in the accounting records. In this lesson, you will learn how to calculate inventory purchase amounts as well as how to record them in the accounting journals.
5. Perpetual and Periodic Inventory Systems
Inventory management is an important part of business success. In this lesson, we will discuss the two types of inventory systems used in accounting today.
6. Recording Purchases Using the Perpetual System
Every transaction that occurs in a business, whether it is a purchase or a sale, must be accounted for. In this lesson, you will learn how to record purchases using the perpetual inventory system.
7. Accounting for Inventory Sales
In order to operate, a business must make sales. In this lesson, we are going to discuss sales of inventory. You will learn the types of sales made, the items that affect sales profit, and the way to record sales in the accounting records.
8. Recording Sales Using the Perpetual System
Each transaction that occurs in a business has an impact on at least two or more accounts. Because of that, recording transactions is essential. In this lesson, you will learn about recording sales transactions using the perpetual inventory system.
9. Reconciling the Bank Account After Purchases or Sales
Even if your accounting skills are top notch, you still should make sure that the books have been reconciled with the bank account in question. This lesson explains why.
10. Inventory Counting: Process & Methods
It is important for any business to know how much and what types of items that they have available to sell. In this lesson, you will learn what inventory is, how to count it, and why it is important.
11. Inventory Valuation Methods: Specific Identification, FIFO, LIFO & Weighted Average
This lesson introduces you to the cost flow assumption methods of specific identification: FIFO, LIFO, and weighted average. You will also learn how to compute inventory in a perpetual system using the methods of FIFO, LIFO, and weighted average.
12. The Importance of Evaluating Investment Management
Whether you're an individual or the financial manager of a company, the ability to evaluate your investment managers is a valuable skill in order to make sure that you are investing as much as possible.
13. The Effects of Financial Statements on Costing Methods
The way you calculate the cost of your inventory can change the profit you show on your financial statement. Learn how one method can show higher profits, while the other method can give you tax benefits.
14. The Effects of Inventory Errors
For companies, a miscount of inventory can be a serious issue. In this lesson we'll look at the effects of inventory errors on companies, both with respect to profits and how the error should be recorded.
15. Net Realizable Value of Inventory: Definition & Method
Calculating inventory value is essential for correct reporting in accounting records. In this lesson, we are going to discuss what net realizable value is and why it plays an important role in inventory valuation.
16. The Lower of Cost or Market of Inventory: Definition & Method
No matter what kind of inventory a company has, that inventory has value. In this lesson, we'll talk about valuing inventory using the lower of cost or market rule.
17. Bid Price vs. Ask Price
In this lesson we explain how the bid price and ask price that appear in stock quotes works as well as the reason for the difference in these two prices.
18. Sales Returns & Allowances: Definition & Examples
Sometimes a customer returns products he/she purchased to a company because they are defective. In this lesson, you will learn more about sales returns and allowances.
19. Point of Sale Terminal: Definition, Advantages & Examples
After reading this lesson, you'll know what a point of sale terminal is and how useful it is for businesses of all sizes. You'll see that there are different types for different businesses and needs.
20. Credit Period: Definition, Formula & Example
After reading this lesson, you'll get a better understanding of how businesses determine how quickly they want you to pay. Learn why some businesses will approve 30-day payment or even 45-day payment.
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Other chapters within the Financial Accounting: Tutoring Solution course
- Introduction to Accounting: Tutoring Solution
- Financial Statements in Accounting: Tutoring Solution
- Mechanics of the Accounting Cycle: Tutoring Solution
- Adjusting Accounts and Preparing Financial Statements: Tutoring Solution
- Internal Controls in Accounting: Tutoring Solution
- Current and Long-Term Liabilities in Accounting: Tutoring Solution