Profit is the difference between its revenues and the expenses incurred in providing those services

Merchandise Inventories (unsold portion) represent goods intended for sale

Wholesaler an intermediary that buys products from manufacturers or wholesalers and sells them to
consumers or end-users

Cost of Goods Sold (sold portion) cost of buying and preparing the merchandise

Total cost of merchandise sold during the period

Largest single deduction on a merchandiser’s income statement

Directly related to the revenue recognized from sale of the goods

Operating Expenses merchandiser’s expenses

Can be distribution cost (selling expenses) or administrative expenses

Distribution Cost expenses incurred in the process of earning sales revenue (ex. Salaries)

Net Sales - COGS = Gross Profit - OPex = Profit

*Normal operating cycle of a merchandising company ordinarily is longer than of a service company

*Merchandising INCOME RECOGNITION - point of sale, the time when ownership changes hands
from seller to the buyer

Beginning Inventory (opening stock) represents the cost of goods that are still unsold as of the start
of the period

Net purchases represents the cost of acquiring inventories during the period

Ending Inventory (closing stock) merchandise available for sale until the end of the period

INVENTORY SYSTEMS USED