Chapter 05

Chapter 05 - ACCOUNTING FOR MERCHANDISING OPERATIONS...

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Unformatted text preview: ACCOUNTING FOR MERCHANDISING OPERATIONS Chapter 5 McGraw-Hill/Irwin Slide 2 COMPARING MERCHANDISING ACTIVITIES WITH SERVICE ACTIVITIES Merchandising Company Service Company Provide service for a fee while keeping some supplies needed for the service McGraw-Hill/Irwin Slide 3 McGraw-Hill/Irwin Slide 3 COMPARING MERCHANDISING ACTIVITIES WITH MANUFACTURING ACTIVITIES Merchandising Company Purchase inventory in ready-to-sell condition. Manufacturing Company Manufacture inventory and have a longer and more complex operating cycle. McGraw-Hill/Irwin Slide 4 McGraw-Hill/Irwin Slide 4 OPERATING CYCLE FOR A MERCHANDISER Begins with the purchase of merchandise and ends with the collection of cash from the sale of merchandise. Purchases Merchandise inventory Credit sales Account receivable Cash collection Purchases Merchandise inventory Cash sales Cash Sale Cash Sale Cash Sale Cash Sale Credit Sale Credit Sale Credit Sale Credit Sale McGraw-Hill/Irwin Slide 5 MERCHANDISING COMPANY How do a merchandiser’s financial statements differ from...
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Chapter 05 - ACCOUNTING FOR MERCHANDISING OPERATIONS...

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