05 Presentation - ACC 211 PRINCIPLES OF ACCOUNTING CHAPTER 5 ACCOUNTING FOR MERCHANDISING ORGANIZATIONS PRESENTATION DECK Prepared by Jill Mitchell

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ACC 211: PRINCIPLES OF ACCOUNTING CHAPTER 5: ACCOUNTING FOR MERCHANDISING ORGANIZATIONS PRESENTATION DECK Prepared by: Jill Mitchell, Assistant Professor, NOVA Reference: Weygandt, Jerry, Kieso, and Kimmel. Accounting Principles Unless noted, illustrations are from the referenced text.
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Chapter 5-2 1.1 Explain the basic differences between the periodic and perpetual inventory system Chapter 5: Accounting for Merchandising Organizations Course Competencies 2. Recording Purchases of Merchandise 1. Merchandising Operations 3. Recording Sales of Merchandise 2.1 Be able to account for issues related to purchases of merchandise inventory using the perpetual inventory system 3.1 Be able to account for issues related to sales of merchandise inventory using the perpetual inventory system
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Chapter 5-3 Merchandising Operations Merchandising Companies: buy and sell goods Wholesaler Retailer Consumer The primary source of revenues is referred to as sales revenue or sales . 1.1 Explain the basic differences between the periodic and perpetual inventory system
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Chapter 5-4 Merchandising Operations Income Measurement Note: Two categories of expenses for merchandising companies are cost of goods sold and operating expenses! 1.1 Explain the basic differences between the periodic and perpetual inventory system Illustration 5.1 Cost of goods sold is the total cost of merchandise sold during the period.
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Chapter 5-5 Income Statement Presentation 1.1 Explain the basic differences between the periodic and perpetual inventory system
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Chapter 5-6 Operating Cycles The operating cycle of a merchandising company ordinarily is longer than that of a service company . Illustration 5-2 1.1 Explain the basic differences between the periodic and perpetual inventory system
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Chapter 5-7 Inventory Systems – Perpetual System Companies maintain detailed records of the cost of each inventory purchase and sale; these records perpetually show the inventory that should be on hand for every item Companies determine the Cost of Goods Sold (COGS) each time a sale occurs A physical count is done to verify inventory balance Example: A grocery store uses bar codes and optical scanners to keep a running total of every box of cereal that it buys and sells The perpetual inventory system provides a continuous record of Inventory and Cost of Goods Sold. 1.1 Explain the basic differences between the periodic and perpetual inventory system
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Chapter 5-8 Inventory Systems – Periodic System Companies do not keep detailed inventory records of the goods on hand throughout the period Companies determine Cost of Goods Sold (COGS) only at the end of the accounting period when an inventory count is performed Beginning inventory $ 100,000 Add: Purchases, net 800,000 Goods available for sale 900,000 Less: Ending inventory 125,000 Cost of goods sold $ 775,000 1.1 Explain the basic differences between the periodic and perpetual inventory system
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5-9 Comparing Perpetual & Periodic
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This note was uploaded on 02/28/2011 for the course ACC 211 taught by Professor Mitchell during the Spring '11 term at Northern Virginia Community College.

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05 Presentation - ACC 211 PRINCIPLES OF ACCOUNTING CHAPTER 5 ACCOUNTING FOR MERCHANDISING ORGANIZATIONS PRESENTATION DECK Prepared by Jill Mitchell

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