中山大学：《基础会计学》（英文版）Lesson 6 Accounting for Merchandising Activities

m中山大學管理學院 会导经sH00 F BUSINESS SUN YAT-SEN UNIVERSITY Lesson 6 Accounting for Merchandising Activities M ask team of NJADAWIEAMLAJAVNAVA School of Business, Sun Yat-gen University

Lesson 6 Accounting for Merchandising Activities Task Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Yat-sen University

Outline o Merchandising activities Operating cycle of merchandising companles o Merchandising cost accounts ◆ Inventory systems 4 Merchandise purchases Sales transactions Adjusting and closing entries Task Team of FUNDAMEnTAL ACCOUNTING Business School. Sun Yat sen University

2 Outline t Merchandising activities t Operating cycle of merchandising companies t Merchandising cost accounts t Inventory systems t Merchandise purchases t Sales transactions t Adjusting and closing entries

Introduction Q Scandals in stock market occur now and then Among them, financial frauds or income manipulation are common, Income manipulation typically starts from making up sales revenues as well as purchases, for example, Guang Xia (Yinchuan). Q In this lesson you are required to think about Why these income statement numbers are so important? How they are recorded in accounting system? Task Team of FUNDAMEnTAL ACCOUNTING Business School. Sun Yat sen University 3

3 Introduction t Scandals in stock market occur now and then. Among them, financial frauds or income manipulation are common. Income manipulation typically starts from making up sales revenues as well as purchases, for example, GuangXia (Yinchuan). t In this lesson you are required to think about, tWhy these income statement numbers are so important? tHow they are recorded in accounting system?

Merchandising Activities Merchandising Companies Manufacturer Wholesaler Retailer Customer Task Team of FUNDAMEnTAL ACCOUNTING Business School. Sun Yat sen University

4 Merchandising Activities

Reporting Financial Performance Q Service organizations sell time to earn revenue. I Examples: accounting firms, law firms, and plumbing services Revenues Expenses Net corne Task Team of FUNDAMEnTAL ACCOUNTING Business School. Sun Yat sen University 5

5 Reporting Financial Performance

Reporting Financial Performance Q Merchandising companies sell merchandise to earn revenue. I Examples: sporting goods, clothing, and auto parts stores [上m ross Net Profit Expenses Income Task Team of FUNDAMEnTAL ACCOUNTING Business School. Sun Yat sen University 6

6 Reporting Financial Performance

Operating Cycle of Merchandise Companies Q Begins with the purchase of merchandise and ends with the collection of cash from the sale of merchandise Cash sale Credit sale Cash l Purchases collection Purchases Cash sales Merchandise Account Merchandise inventory receivable Inventory Credit sales」 Task Team of FUNDAMEnTAL ACCOUNTING Business School. Sun Yat sen University 7

7 Operating Cycle of Merchandise Companies

Merchandising Cost Accounts Beginning inventory+ Net cost of Year 1 purchases Merchandise available for sale Ending Inventory+ Cost of Goods Income Year 1 Sold Statement Becomes beginning Balance inventory of Year 2 Sheet Task Team of FUNDAMEnTAL ACCOUNTING Business School. Sun Yat sen University 8

8 Merchandising Cost Accounts

Inventory Systems ◆ Perpetual method Gives a continual record of the amount of inventory on hand. When an item is sold it is recorded in the Cost of Goods Sold account ◆ Periodic method Requires updating the inventory account only at the end of the period, Acquisition of merchandise inventory is recorded in a temporary purchases account Task Team of FUNDAMEnTAL ACCOUNTING Business School. Sun Yat sen University 9

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Inventory Systems Q Perpetual provides a continuous record of: The amount of inventory on hand. Cost of goods sold to date. Q Periodic requires a physical count of goods to determine. The amount of inventory on hand Cost of goods sold. Task Team of FUNDAMEnTAL ACCOUNTING Business School. Sun Yat sen University 10

10 t Perpetual provides a continuous record of: The amount of inventory on hand. Cost of goods sold to date. tPeriodic requires a physical count of goods to determine: The amount of inventory on hand. Cost of goods sold