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Larson−Wild−Chiappetta: Fundamental Accounting Principles, Seventeenth Edition

5. Accounting for Merchandising Operations

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© The McGraw−Hill Companies, 2004

“I felt we should go into something that we had some connection to”—Dwayne Lewis (standing; Michael Cherry sitting)

5
A Look Back

Accounting for Merchandising Operations
A Look at This Chapter
This chapter emphasizes merchandising activities. We explain how reporting merchandising activities differs from reporting service activities. We also analyze and record merchandise purchases and sales transactions and explain the adjustments and closing process for merchandisers.

A Look Ahead
Chapter 6 extends our analysis of merchandising activities and focuses on the valuation of inventory. Topics include the items in inventory, costs assigned, costing methods used, and inventory estimation techniques.

Chapter 4 focused on the final steps of the accounting process. We explained the importance of proper revenue and expense recognition and described the closing process. We also showed how to prepare financial statements from a work sheet.

Larson−Wild−Chiappetta: Fundamental Accounting Principles, Seventeenth Edition

5. Accounting for Merchandising Operations

Text

© The McGraw−Hill Companies, 2004

Learning Objectives

CAP
Conceptual Analytical Procedural merchandising activities C1 Describeincome components for aand A1 Compute the acid-test ratio and explain its use to assess liquidity. identify merchandising company. (p. 178) (p. 193)

P1 Analyze and record transactions a for merchandise purchases using perpetual system. (p. 180) perpetual system. (p. 185)

C2 Identify and explain the inventory asset of a merchandising company.
( p. 179) both perpetual and C3 Describeinventory systems. ( p. 179) periodic C4 Analyze and interpret costaflows and operating activities of

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