Unlike expenses for a service company, expenses for a merchandising company are divided into two categories:
- Cost of goods sold – the total cost of merchandise sold during the period.
- Operating expenses – selling and administrative expenses.
What is the major expense of a merchandising business?
cost of goods sold
The largest source of revenue for a merchandiser is sales. Usually the largest expense for a merchandiser is cost of goods sold. (This can also be called cost of sales.) The Page 2 difference between the net sales computation and cost of goods sold is gross profit, which is also called the gross margin.What kind of expense is merchandise?
The cost of any merchandise inventory sold during an accounting cycle is reported as an expenditure on the income statement for the cycle in which the sale was made. Any merchandise inventory not sold during an accounting cycle is registered as a current asset and included in the balance sheet until it’s sold.
What are administrative expenses?
Administrative expenses may include salaries of senior management and the costs associated with general services or supplies; for example, legal, accounting, clerical work, and information technology.
When a sale is recorded under the periodic method?
Under the periodic inventory method, cost of goods sold is calculated at the end of the period only and recorded in one entry.
What are the expenses of a merchandising company?
Two categories of expenses in merchandising companies are a. cost of goods sold and financing… a. cost of goods sold and financing expenses. b. operating expenses and financing expenses. c. cost of goods sold and operating expenses. d. other expenses and cost of goods sold.
Which is the primary source of revenues for merchandising companies?
the primary source of revenues for merchandising companies is the sale of merchandise 2 categories of expenses in merchandising companies cost of goods sold and operating expenses cost of goods sold total cost of merchandise sold during the period; this expense is directly related to the revenue recognized from the sale of goods
How are cost of goods sold and operating expenses related?
2 categories of expenses in merchandising companies cost of goods sold and operating expenses cost of goods sold total cost of merchandise sold during the period; this expense is directly related to the revenue recognized from the sale of goods
How does the seller record the cost of goods sold?
The seller makes two entries for each sale: 1. record the sale by debiting (^) cash (or acct rec if a credit sale) and credit (^) Sales for the price of goods 2. record the cost of the merch sold by debiting (^) Cost of Goods Sold and crediting Merch Inv to record credit granted to the buyer for returned goods and the cost of goods returned
