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Understanding Merchandising and Inventory Management Study Guide

This guide provides a foundational understanding of merchandising and inventory systems, crucial for businesses involved in the purchase and sale of physical goods. It breaks down key financial concepts, explains different inventory tracking methods (perpetual vs. periodic), and discusses transaction recording techniques (gross vs. net methods). Essential for students and professionals in accounting and business management, this resource clarifies how to accurately report financial performance a

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Financial Statements and Bookkeeping

Financial Statements and Bookkeeping Fundamentals

Accounting is a system for measuring the results of business activities and communicating those results to interested users through recording, classifying, reporting, and interpreting financial data.

  • Accounting equation
  • Double-entry bookkeeping
  • Accrual accounting
  • Cash accounting
  • General journal
  • General ledger
  • T account
  • Debits and credits
  • Assets
  • Liabilities
  • Owners' equity
  • Revenue
  • Expenses
  • Income statement
  • Statement of Retained Earnings
  • Balance Sheet
  • Cash Flow Statement
  • Trial balance

The Accounting Cycle and Adjusting Entries

The Accounting Cycle and Adjusting Entries

Explain the steps in the accounting cycle, the use of adjusting entries, and the preparation of financial statements.

  • Accounting Cycle
  • Adjusting Journal Entries
  • GAAP
  • Matching Principle
  • Prepaid Expenses
  • Depreciation
  • Unearned Revenues
  • Accrued Revenues
  • Accrued Expenses
  • Trial Balance
  • Income Statement
  • Statement of Owner's Equity
  • Balance Sheet
  • Articulation
  • Proprietorship
  • Corporation
  • Partnership
  • Retained Earnings
  • Dividends

Merchandising and Inventory Systems

Merchandising and Inventory Systems

Describe merchandising and explain the financial statement components of sales, cost of goods sold, merchandise inventory, and gross profit while differentiating between perpetual and periodic inventory systems.

  • Merchandising
  • Perpetual inventory system
  • Periodic inventory system
  • Cost of goods sold
  • Merchandise inventory
  • Gross profit
  • Gross method
  • Net method
  • Purchase and sales transactions
  • Credit terms
  • Purchase returns and allowances
  • Purchase discounts
  • Sales returns and allowances
  • Sales discounts
  • Discounts lost
  • Cash budgeting

Fundamentals of Cash and Bank Reconciliation

Fundamentals of Cash and Bank Reconciliation

Understand what is cash, sources of cash, disbursements of cash, how is cash recorded in the firm’s General Ledger, bank reconciliation, and petty cash.

  • Cash inflows
  • Cash outflows
  • General Ledger
  • Bank reconciliation
  • Petty cash
  • Cash management
  • Internal control
  • Segregation of duties
  • Journal entries
  • Notes Receivable
  • Service Charge Expense

Understanding and Accounting for Receivables

Accounting for Receivables and Bad Debts

Understand the difference between accounts receivable, notes receivable, and other receivables, including the application of the allowance method and direct-write off method.

  • Accounts Receivable (A/R)
  • Notes Receivable (N/R)
  • Installment Receivables
  • Net Realizable Value (NRV)
  • Direct-write off method
  • Allowance method
  • Aging method
  • % of sales method
  • Bad debt expense
  • Uncollectible accounts
  • Interest on notes receivable
  • Liquidity
  • Write-off of bad debts
  • Recoveries of bad debts

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