Merchandising Operations

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Financial Accounting
Liang Chen

Merchandising Operations The primary source of revenues is the sale of merchandise. These revenues are referred to as sales revenue, or simply sales Expenses for a merchandising company are divided into two categories: cost of goods sold, and operating expenses The cost of goods sold is the total cost of merchandise sold during the period. This expense is directly related to the revenue earned from the sale of goods. Net sales Costs of goods sold = gross profit Sales revenue less cost of goods sold is called gross profit. Operating expenses are expenses that are incurred in the process of earning sales revenue Gross profit operating expenses = net income (or net loss) Records of inventory are necessary Operating cycles The operating cycle of a merchandising company is the average time from the purchase of merchandise inventory and its eventual sale Inventory systems There are two main in
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