Learning Outcomes for Merchandising Enterprise Accounting

Accounting for a Merchandising Enterprise involves which of the following?

• Recording purchases and sales of goods for resale

• Tracking only service revenue

• Focusing solely on manufacturing costs

• Ignoring inventory transactions

Which of the following best describes the journal entries required for buyer and seller under Perpetual and Periodic systems as per IFRS?

• Perpetual system records inventory continuously, while periodic system updates inventory at period end.

• Both systems record inventory only at the end of the year.

• Perpetual system does not require journal entries for purchases.

• Periodic system records inventory continuously.

Payment terms are:

• the conditions under which a seller will complete a sale to a buyer

• the total amount of goods sold in a transaction

• the method of shipping goods to a customer

• the process of returning goods to a supplier

Shipment terms are defined as:

• The conditions under which goods are transported from seller to buyer

• The method of payment for goods

• The type of packaging used for goods

• The insurance policy for goods

The Cost of Goods Sold refers to:

• The direct costs attributable to the production of goods sold by a company.

• The total revenue generated from sales.

• The expenses related to marketing and advertising.

• The profit earned after all expenses are deducted.

A Periodic Inventory Accounting System is:

• a system where inventory levels are updated at specific intervals.

• a system where inventory is updated continuously after each transaction.

• a method that uses barcodes to track inventory in real time.

• a computerized system that automatically reorders stock.

A Perpetual Inventory Accounting System is:

• a system that continuously updates inventory records for every purchase and sale

• a system that only updates inventory records at the end of the accounting period

• a method of valuing inventory based on estimated costs

• a manual process of counting inventory once a year

Journal entries for buyer and seller under periodic and perpetual systems are:

• Different for each system and party involved

• The same for both systems and parties

• Only required for the seller

• Only required for the buyer

The FIFO inventory valuation method is:

• A method where the first items purchased are the first to be sold.

• A method where the last items purchased are the first to be sold.

• A method where inventory is valued at market price only.

• A method that ignores the order of inventory purchase.

The Specific Identification inventory valuation method is:

• A method that tracks the actual cost of each specific item in inventory.

• A method that averages the cost of all items in inventory.

• A method that assumes the earliest goods purchased are the first to be sold.

• A method that assumes the latest goods purchased are the first to be sold.