PA I ch03 Accounting for Merchandising Operations.ppt -...

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5-11Principles AccountingI(Based on IFRS)
5-22CHAPTER 3Accounting cycle for merchandisingbusiness (8 Hrs )
5-3Chapter 3Accounting forMerchandising OperationsLearning ObjectivesAfter studying this chapter, you should be able to:1.Identify the differences between service and merchandising companies.2.Explain the recording of purchases under a perpetual inventory system.3.Explain the recording of sales revenues under a perpetual inventorysystem.4.Explain the steps in the accounting cycle for a merchandisingcompany.5.Prepare an income statement for a merchandiser.
5-4Preview ofChapter 3
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5-5LO 1Identify the differences between service and merchandising companies.
5-6Income MeasurementIllustration 5-1Cost of goodssold is the totalcost of merchandise sold duringthe period.Not used in aservice business.LO 1Identify the differences between service and merchandising companies.Merchandising Operations
5-7The operating cycleof amerchandisingcompanyordinarilyis longer than that ofaservicecompany.Illustration 5-2LO 1Identify the differences between service and merchandising companies.OperatingCyclesMerchandising OperationsIllustration 5-3
5-8Inventory Cost FlowTheThephysical quantities in inventory may be measuredphysical quantities in inventory may be measuredby useby useof eitherof eithera periodic or a perpetual inventory systema periodic or a perpetual inventory system. Both. Bothsystemsmaybeemployedsimultaneouslyforvarioussystemsmaybeemployedsimultaneouslyforvariousinventories, suchinventories, suchas material, finished goods, and goods inas material, finished goods, and goods inprocess.process.Two types of systemsfor maintaining inventory recordsperpetual systemorperiodic system.Merchandising Operations
5-9Perpetual SystemLO 1Identify the differences between service and merchandising companies.Maintain detailed records of the cost of eachinventory purchase and sale.Records continuously show inventorythat should be on hand.Company determines cost of goods sold each time a saleoccurs.Merchandising OperationsFlow of Costs
5-10LO 1Identify the differences between service and merchandising companies.Features:Perpetual SystemPerpetual System1.Purchases increase Merchandise Inventory.2.Freight costs, Purchase Returns and Allowances and Purchase Discounts areincluded in Merchandise Inventory.3.Cost of Goods Sold is increased and Merchandise Inventory is decreased for eachsale.4.Physical count done to verify Merchandise Inventory balance.The perpetual inventory system provides a continuous record of MerchandiseInventory and Cost of Goods Sold.

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Term
Fall
Professor
professor_unknown
Tags
Balance Sheet, Income Statement, Revenue, Generally Accepted Accounting Principles, Sauk Stereo

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