Accounting for Basic Merchandising Transactions Learning Objectives

Merchandising Definition and Overview

• Merchandising is the process of buying and selling goods.
• Merchandise refers to goods for sale in the ordinary course of business.
• Merchandising has been one of the most visible businesses in our economy.

Key Transactions in Merchandising

• Merchandise purchases and sales are predominant transactions in a merchandising business.
• The merchandising business buys goods from merchandise suppliers, sells them “as is” to customers, and collects its payment.
• The unique transaction in merchandising is the buying and selling of the goods.

Roles in Merchandising Transactions

• There are three important persons in the merchandising transactions: producer, merchandiser, and consumer.
• A producer is the manufacturer of the goods bought by the merchandiser.
• A consumer utilizes serves as the broker or spends the utility between the of the goods supplier and the buyer.

Business Documents Used in Merchandising

• The following are the usual business documents used in merchandising transactions:
• Purchase Order: details the quantity, specifications, significant dates, buyer, and other important matters with regard to the merchandise being purchased.
• Receiving Report: validates the details of the merchandise received.
• Sales Invoice: a more formal document confirming the transaction entered into by the seller and the buyer with the needed transaction details such as the payment terms.
• Official Receipt: a document confirming seller's receipt of money from the buyer.
• Delivery Receipt: a formal communication to the buyer reminding him of his purchase and its related payment terms.

Test your understanding of basic merchandising transactions with this quiz covering the relationships of producer, merchandiser, and consumer, business documents used, journal entries, pricing, and trade discounts. This quiz is based on the learning objectives outlined in the chapter 'Accounting for Basic Merchandising Transactions' by Ronalyn Joy E. Mercado, CPA, LPT.