What are two major activities of a merchandising business?

Purchases and sales of merchandise are the two major activities of a merchandising business.

When cash is received for a sale on account within the discount period the amount credited to accounts receivable is reduced by the amount of the discount?

When cash is received for a sale on account within the discount period, the amount credited to Accounts Receivable is reduced by the amount of discount. When a customer is granted credit for merchandise returned, Accounts Receivable is debited.

How do you describe the activities or transactions of a merchandising business?

Merchandising companies resell goods to consumers. Their operating cycle begins with cash-on-hand, purchasing inventory, selling merchandise, and collecting customer payments. A purchase discount is an incentive for a retailer to pay their account early.

What account is used to record sales tax owed by a business to a city or state?

The amount of sales tax collected is an asset of the business until paid to the state government. The amount of sales tax collected is recorded in a separate liability account titled Sales Tax Payable.

What are the two major types of merchandising?

There are two types of merchandising companies – retail and wholesale.

Is sales tax an expense or liability?

In this case, the initial collection of sales taxes creates a credit to the sales taxes payable account, and a debit to the cash account. When the sales taxes are due for payment, the company pays cash to the government, which eliminates its sales tax liability. In this situation, sales tax is a liability.

Is sales discount a debit or credit?

If a customer takes advantage of these terms and pays less than the full amount of an invoice, the seller records the discount as a debit to the sales discounts account and a credit to the accounts receivable account.

What are the activities of merchandising business?

Merchandising Activities

• Merchandising means selling products to retail customers.
• General Journal.
• General Ledger.
• Cost of Goods Sold.
• Sales accounts deal with customers and sale transactions:
• Purchase accounts deal with suppliers and purchase transactions.
• Example:

  Is the amount of sales tax collected is a liability of a business until paid to the government?

  The amount of sales tax collected is an asset of the business until paid to the state government. The amount of sales tax collected is recorded in a separate liability account titled Sales Tax Payable. The sales invoice from a seller is considered by the buyer to be a purchase invoice.

  What are the two types of merchandising transactions?

  Merchandising transactions are separated into two categories: purchases and sales. In general, a purchase transaction occurs between a manufacturer and the merchandiser, also called a retailer. A sales transaction occurs between a customer and the merchandiser or retailer.

  How does merchandising affect the business you frequent?

  You are probably not thinking about how your purchases impact the businesses you frequent. Whether the business is a service or a merchandising company, it tracks sales from customers, purchases from manufacturers or other suppliers, and costs that affect their everyday operations.

  When does a purchase occur between a manufacturer and a retailer?

  In general, a purchase transaction occurs between a manufacturer and the merchandiser, also called a retailer. A sales transaction occurs between a customer and the merchandiser or retailer. We will now discuss the characteristics that create purchase and sales transactions for a retailer.

  What does merchandise inventory mean in accounting terms?

  Merchandise Inventory is a current asset account that houses all purchase costs associated with the transaction. This includes the cost of the merchandise, shipping charges, insurance fees, taxes, and any other costs that gets the products ready for sale.