Download Merchandising Operations: Source Documents, Payment Terms, and Inventory Systems and more Study notes Business Accounting in PDF only on Docsity!
MERCHANDISING OPERATIONS 1
SOURCE DOCUMENTS
Sales Invoice is prepared by the seller of goods and sent to the buyer. This document contains the name and address of the buyer, the date of sale and information-quantity, description and price-about the goods sold. It also specifies the amount of sales, and the transportation and payment terms.
Bill of lading is a document issued by the carrier-a trucking, shipping or airline-that specifies contractual conditions and terms of delivery such as freight terms, time, place, and the person named to receive the goods.
Statement of account is a formal notice to the debtor detailing the accounts already due.
Official receipt evidences the receipt of cash by the seller or the authorized representative. It notes the invoices paid and other details of payment.
Deposit slips are printed forms with the depositor's name, account number and space for details of the deposit. A validated deposit slip indicates that cash and checks with the supplied details were actually deposited or credited to the account holder
Purchase requisition is a written request to the purchaser of an entity from an employee or user department of the same entity that goods be purchased.
A check is a written order to a bank by a depositor to pay the amount specified in the check from his checking account to the person named in the check. The entity issuing the check is the payor while the receiver is the payee.
Purchase order is an authorization made by the buyer to the seller to deliver merchandise as detailed in the form.
Credit memorandum is a form used by the seller to notify the buyer that his account is being decreased due to errors or other factors requiring adjustments.
Receiving report is a document containing information about goods received from a vendor. It formally records the quantities and description of the goods delivered.
Terms of Payment
Cash
Sales on Account
- Credit Period
- n/30 ; n/10 eom; n
Inventory Systems
Merchandise inventory is the key factor in determining cost of sales. Because merchandise inventory represents goods available for sale , there must be a method of determining both the quantity and the cost of these goods.
Perpetual
- The inventory is continuously updated.
- perpetually updating the inventory account requires that at the time of purchase , merchandise acquisitions be recorded as debits to the inventory account. At the time of sale, the cost of sales is determined and recorded by a debit to the cost of the sales account and a credit to the inventory account
- both the inventory and cost of sales accounts are recorded simultaneously
- The ending inventory should be reconciled with the actual physical account at the end of the period assuming that no theft, spoilage, or error has occurred.
Periodic
is primarily used by businesses that sell relatively inexpensive goods and that are not yet using computerized scanning systems to analyze goods sold.
when goods are purchased, a separate set of accounts-purchases discounts, purchases returns and allowances, and transportation in-is used to accumulate information on the net cost of the purchases.
Only at the end of the period, when the inventory is counted, will entries be made to the inventory account to establish its proper balance
Net Sales is the total revenue a business earns from selling its goods or services, after deducting specific costs
Gross Sales is the total amount a business earns from selling goods or services before deducting any costs
Gross Sales Under accrual accounting, revenues from the sale of merchandise are considered to be earned in the accounting period in which the title of goods passes-usually at the point of delivery-from the seller to the buyer.
Sales discount
Sales Returns and Allowances
The seller may just grant an allowance or deduction from the selling price. A high sales returns and allowances figure is not commendable because it may signal poor quality of goods and thus may result in dissatisfied customers.
