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Is merchandise the same as inventory?
Merchandise and inventory are related concepts but not exactly the same. Merchandise refers specifically to the goods that a business buys for resale to customers, while inventory encompasses all items a company holds for sale, including raw materials, work-in-progress, and finished goods. Therefore, all merchandise is part of inventory, but not all inventory is merchandise.
Is inventory turnover the same as inventory conversion period?
Inventory conversion period tells that how many days it is require to convert inventory to finished goods while inventory turnover tell in number of times that how many times inventory turned into finished goods in one fiscal year.
Is sales returns an asset?
Sales return is that portion of finished goods which once sold but refund back by customers so as finished goods are assets same way sales return is asset as well because it increase the finished goods inventory.
The ending merchandise inventory for a period is the same as beginning inventory of which period?
For the following period.
How do you work out cost of goods sold?
The cost of goods sold depends on (1) the inventory system used, and, (2) whether or not a cost flow assumption is used (and if so, which one).Inventory systemsThere are two inventory systems: the perpetual inventory system and the periodic inventory system.The perpetual inventory systemWith the perpetual inventory system, the inventory is updated with every purchase and expense. This implies that cost of goods sold is increases with every sale, at the time of each sale. The cost bases depends on the cost flow assumption used (see below)The periodic inventory systemWith the periodic inventory system, purchases are expensed, while with sales, cost of goods sold is not calculated. Hence, there is no system in place that can tell how much inventory there is.The inventory is counted at the end of the period. At this point in time, the cost of goods sold can be computed.Because:beginning inventory + purchases = ending inventory + cost of goods soldthis implies:cost of goods sold = purchases + beginning inventory - ending inventoryThe end of period count is a physical count. The $ value of the goods depend on the cost flow assumption (discussed next)Cost flow assumptionWhen goods are similar in nature (the company is trading coffee, oil, etc), the company can decide to assume some 'flow' of the goods for cost purposes. Common assumptions are:LIFO: Last in, first out: the most recent purchases are sold firstFIFO: First in, first out: the oldest inventories are soldAverage cost: An average cost is computedThe alternative is 'specific identification', meaning that no cost flow is assumed but the actual cost for the goods is determined (this requires some sort of information system).The cost of good soldDepending on choices (1) for inventory system and (2) cost flow assumption different values for cost of goods sold and ending inventory can be possible.For FIFO, the perpetual and periodic inventory will lead to the same cost of goods sold (as well as ending inventory value).For LIFO (as well as average cost), the cost of goods sold could very well differ for the perpetual inventory system and the periodic inventory system. With the periodic inventory system the cost of goods sold is determined at the end of the period. This means that for example purchases after the last sale are included for determining the cost of goods sold. This is not the case with the perpetual inventory system. With the perpetual inventory system this is done for each sale at the time of sale.
Is merchandise the same as inventory?
Merchandise and inventory are related concepts but not exactly the same. Merchandise refers specifically to the goods that a business buys for resale to customers, while inventory encompasses all items a company holds for sale, including raw materials, work-in-progress, and finished goods. Therefore, all merchandise is part of inventory, but not all inventory is merchandise.
Is inventory turnover the same as inventory conversion period?
Inventory conversion period tells that how many days it is require to convert inventory to finished goods while inventory turnover tell in number of times that how many times inventory turned into finished goods in one fiscal year.
Is sales returns an asset?
Sales return is that portion of finished goods which once sold but refund back by customers so as finished goods are assets same way sales return is asset as well because it increase the finished goods inventory.
The ending merchandise inventory for a period is the same as beginning inventory of which period?
For the following period.
What will increase one asset and decrease another asset?
There are many transactions that do this. If you receive a payment on account from a customer, you increase Cash and decrease Accounts Receiveable. If you pay for raw materials or merchandise with cash, you increase Inventory and decrease Cash. You can also increase Fixed Assets and decrease Cash if you buy an asset with cash. Moving product from Raw Materials to Finished Goods Inventory is another example. Moving excess cash to an investment account does the same thing. When you make a sale, you decrease Inventory and increase Accounts Receivable.
What is the difference between wares and merchandise?
The word 'wares' and the word 'merchandise' are synonyms for each other: goods that someone is selling, Although the word 'wares' is more commonly used for crafts for sale or things sold on the street, and merchandise is more commonly used for goods of all kinds sold in stores, the definitions are basically the same.
Do sales and cost of goods sold get recorded at the same time?
No. 1. If you do not have a computerized accounting system: Inventory manufactured or purchased for sale are first debited to "Inventory". When sold, you debit "bank, or accounts receivable" and credit "sales" At the end of the accounting period, which could be monthly or yearly, or anytime inbetween, usually after a physical inventory, you then reduce your inventory by crediting "Inventory" and charging the amount reduced to "Cost of Sales". 2. If you have a computerized accounting system: When you acquire the merchandise to be sold you debit it to a specific "card" in the program's memory of the "Inventory" account. When you sell it, you will debit "Bank or accounts receivable" and credit "Sales". In order to create your sales invoice, you will have to identify the "card" where the merchandise is posted. When you change accounting periods (a.i. May to June) the computerized accounting program will then process the sale by reducing the inventory and debiting "Cost of Sales" automatically.
How do you work out cost of goods sold?
The cost of goods sold depends on (1) the inventory system used, and, (2) whether or not a cost flow assumption is used (and if so, which one).Inventory systemsThere are two inventory systems: the perpetual inventory system and the periodic inventory system.The perpetual inventory systemWith the perpetual inventory system, the inventory is updated with every purchase and expense. This implies that cost of goods sold is increases with every sale, at the time of each sale. The cost bases depends on the cost flow assumption used (see below)The periodic inventory systemWith the periodic inventory system, purchases are expensed, while with sales, cost of goods sold is not calculated. Hence, there is no system in place that can tell how much inventory there is.The inventory is counted at the end of the period. At this point in time, the cost of goods sold can be computed.Because:beginning inventory + purchases = ending inventory + cost of goods soldthis implies:cost of goods sold = purchases + beginning inventory - ending inventoryThe end of period count is a physical count. The $ value of the goods depend on the cost flow assumption (discussed next)Cost flow assumptionWhen goods are similar in nature (the company is trading coffee, oil, etc), the company can decide to assume some 'flow' of the goods for cost purposes. Common assumptions are:LIFO: Last in, first out: the most recent purchases are sold firstFIFO: First in, first out: the oldest inventories are soldAverage cost: An average cost is computedThe alternative is 'specific identification', meaning that no cost flow is assumed but the actual cost for the goods is determined (this requires some sort of information system).The cost of good soldDepending on choices (1) for inventory system and (2) cost flow assumption different values for cost of goods sold and ending inventory can be possible.For FIFO, the perpetual and periodic inventory will lead to the same cost of goods sold (as well as ending inventory value).For LIFO (as well as average cost), the cost of goods sold could very well differ for the perpetual inventory system and the periodic inventory system. With the periodic inventory system the cost of goods sold is determined at the end of the period. This means that for example purchases after the last sale are included for determining the cost of goods sold. This is not the case with the perpetual inventory system. With the perpetual inventory system this is done for each sale at the time of sale.
What happens when inventory prices remain constant?
When inventory prices remain constant, the value of remaining inventory also stays the same. There will be no impact on cost of goods sold or gross profit margins when items are sold at the same price that they were purchased for. However, fluctuations in other expenses or sales volumes can still affect overall profitability.
How do you calculate stock holding ratio?
Stock holding ratio is the same as inventory turnover ratio. To find this ratio one must find the cost of goods sold to a business and its average inventory over a certain time period.
How does Mexico produces?
Same way most countries do: using natural resources that are mined or grown, transforming them into finished goods and then selling those goods within the country or abroad.
Is merchandising and inventory the same thing?
No, merchandising and inventory are not the same thing. Merchandising refers to the strategies and practices used to promote and sell products to customers, including product display, pricing, and marketing. Inventory, on the other hand, refers to the actual stock of goods and materials that a business holds for sale or production. While they are related, as effective merchandising can influence inventory turnover, they serve distinct functions in retail and business operations.
