Business Administration 2257 Chapter Notes - Chapter 5: Accounts Payable, Gross Profit, Operating Expense

• School: Western University
• Department: Business Administration
• Course: Business Administration 2257
• Professor: Vicki Sweeney

Document Summary

Retailers: merchandising companies that purchase and sell directly to consumers. Manufacturers: companies that produce goods for sale to wholesalers. The time it takes to go from cash to cash in producing revenues. Performs service for customers on account pay cash to employees performing service . Purchase inventory from suppliers on account pay cash to suppliers sell inventory to customers on account receive cash from customers. Expenses for merchandise company are divided into 2 categories: cost of goods sold: total cost of the merchandise sold during the period, operating expenses: expenses that occurred during the process of earning sales revenue. Detailed records are maintained for the cost of each product that is purchased and sold. These records continuously show the quantity and cost if the inventory purchased, sold, and on hand. Under this system, cogs and reduction in inventory, both its inventory and cost, are recorded each time a sale occurs.