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A business that buys finished goods and resells them. Ex: Best Buy
C.O.G.S. (Costs of Goods Sold) and Operating Expenses.
the goods that the company or state have and sell
As with any company, to supply goods or services at a profit.
Franchise
Cost of goods sold and Gross profit
A merchandising business sells goods that it produces. True or False
Purchase cost is the cost of inventory in case of manufacturing company and cost or goods for resale purpose in case of merchandising company.
Merchandising companies do not calculate the raw materials placed in production or cost of goods manufactured. Merchandisers purchase goods from suppliers instead of manufacturing goods. The cost of these purchases from suppliers is often called net purchases in the income statement, in contrast to cost of goods manufactured in a manufacturer’s income statement. The net purchases line consists of purchases, purchases returns and allowances, purchases discounts, and freight in. Merchandisers do not use the schedule of cost of goods manufactured (and related schedule of raw materials placed in production). Merchandisers use an account called merchandise inventory, or simply inventory, instead of finished goods inventory. This reflects that merchandisers do not produce goods.
As you can see, in merchandising companies we have more special components of revenues and expenses than service companies. Besides, merchandising have two different systems periodic inventory system and perpetual inventory system. Each system has own way to count goods.
Nike is primarily a manufacturing business. They produce all of their goods themselves. While they do have "outlets", nike apparel is generally sold by merchandisers. Merchandising are places that don't typically make their own product, they just sell others.
The effects of merchandising is that it generally leads to increased profits and revenue. Merchandising refers to the activity of promoting the sales of goods through the presentation in their outlets.
The normal operating cycle of a service company includes the following steps : 1. Perform services. 2. Accounts Recievable 3. Get cash There are no goods involved. Only a service has to be performed, thus no dependencies from suppliers etc. The operating cycle of a merchandising company has some additional steps 1.Buy inventory 2. Sell inventory 3. Accounts recievable 4. Get cash The goods have to be ordered from suppliers of wholesalers and stored. Then goods from inventory are sold.
FMCG stands for fast moving consumer goods. Merchandising of these items requires less marketing, and knowledge of hypermarket sales, as fast moving goods may or may not need advertising.
The income statement of a merchandising company shows the company's revenue, cost of goods sold, and operating expenses. It calculates the gross profit by subtracting the cost of goods sold from the revenue and then deducts the operating expenses to arrive at the net income. The income statement is used to assess the profitability and financial performance of the company.
Some of the steps may change. A merchandising company sells products, therefore the will have to consider the cost of goods sold, etc to find their net profit. A service company provides a service, therefore they won't have a cost of goods sold account, but instead figure supply expense. For the most part the steps will be either the same or very similar, however, accounts used will change.
Over-the-counter indicates to me that this is a type of Merchandising business. The accounting is really Merchandising Accounting. Accounts such as Revenue, Cost of Goods Sold, Inventory, all come into play. Merchandising company's also use such things as FIFO or LIFO inventory to keep track of the merchandise they are selling. Some examples of a Merchandising Company is Wal-Mart, Fry's Electronics, Grocery Stores, Clothing Stores, etc. These companies purchase "Inventory" at whole-sale prices, mark up the price to Retail, sales the merchandise and make profit off the difference. Whole-Sale price would be the COGS (cost of goods sold).