Warren_23e__AISE_IM_Ch06 - chapter 6 Accounting for...

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chapter 6 Accounting for Merchandising Businesses _____________________________________________ OPENING COMMENTS Chapter 6 introduces the merchandising form of business. It opens by contrasting the income statements of service and merchandising businesses. The chapter then presents the financial statements for a merchandising business and summarizes the essential differences between the periodic and perpetual inventory systems. After a brief description of the periodic inventory system, the chapter focuses solely on the perpetual system. The text illustrates how to record transactions related to the sale and purchase of merchandise under the perpetual inventory system. It also presents a chart of accounts and an overview of the accounting cycle for a merchandiser using a perpetual inventory system. The 23nd edition of Accounting focuses on the perpetual inventory method, since computerized accounting and inventory systems have made it feasible for even small merchandisers to track each purchase and sale of inventory. In a computerized accounting system, the need for an end-of-period spreadsheet (work sheet) is virtually eliminated, and closing entries are performed automatically. Therefore, discussion of these topics is covered in Appendix 2 at the end of this chapter. You may choose to omit coverage of this appendix. This action will not hinder your students’ work in future chapters. Appendix 1 illustrates recording merchandising transactions using a manual accounting system with special journals and a computerized accounting system using QuickBooks. After studying the chapter, your students should be able to: 1. Distinguish between the activities and financial statements of service and merchandising businesses. 2. Describe and illustrate the financial statements of a merchandising business. 79 This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold, copied, or distributed without the prior consent of the publisher.
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80 Chapter 6 Accounting for Merchandising Businesses This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold, copied, or distributed without the prior consent of the publisher. 3. Describe and illustrate the accounting for merchandise transactions including: sales of merchandise; purchase of merchandise; freight, sales taxes, and trade discounts; dual nature of merchandise transactions. 4. Describe the adjusting and closing process for a merchandising business. STUDENT FAQS How do you handle a business that is primarily a service business but has some merchandising aspects? In a merchandising (retail) type businesses, how can you use the periodic inventory method and still
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This note was uploaded on 09/25/2010 for the course FEUI ACCT01 taught by Professor Prof.steve during the Spring '10 term at Indonesian Computer University.

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Warren_23e__AISE_IM_Ch06 - chapter 6 Accounting for...

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