Acct Financial | Course Paper

Financial Accounting

Eleventh Edition

Chapter 6

Inventory and

Merchandising

Operations

Learning Objectives

6.1 Understand the nature of inventory and retailing

operations

6.2 Record inventory-related transactions

6.3 Understand and apply different inventory cost

assumptions

6.4 Analyze effects of inventory errors

6.5 Evaluate a company’s retailing operations

Learning Objective 6.1

Understand the nature of inventory and retailing operations

Exhibit 6-1 Contrasting a Service Company

with a Merchandiser (1 of 2)

Merchandisers have two accounts that service entities don’t

need:

•Cost of goods sold on the income statement

•Inventory on the balance sheet

Exhibit 6-1 Contrasting a Service Company

with a Merchandiser (2 of 2)

Merchandisers have two accounts that service entities don’t

need:

•Cost of goods sold on the income statement

•Inventory on the balance sheet

Exhibit 6-2 Inventory and Cost of Goods

Sold When Inventory Cost Is Constant

Assume a retailer has in

stock 3 shirts that cost

$30 each. The store

sells 2 of the shirts for

$50 each.

Understand the nature of inventory

and retailing operations (1 of 2)