Question

• What is a merchandise company?
• Describe the difference between wholesalers and retailers.
• Describe the difference(s) between the periodic and perpetual inventory accounting system?
• What is gross profit percentage? How is it used as an indicator of profitability?

Answer 1

Y Merchandise Company Merchandising compontes are the companies that buy the products and then practically sell the products plus some source of the profit - Eg> Merchandise compantes buy product A and they sell produd & A (4) plus Egy Amazon.com , walmart , office deposit ett.... -Y primary Source of revenues for Merchandise company es . reffered to as sales revenue (or) Sales → Wholesalers and Retailer's Whde Salers Retailers 1. Buy goods in large quantities. I. Buy goods in small quantities. 2. Buy goods directly from producers 2. generally buy goods 3. Deals P limited Variety from the wholesalers. of goods ? 3 Deals in wide range % products 4 Required capital is More 4. Required capital is less 5. Seus goods for resale 6. sell goods for consumption Purpose 6. No direct contact with 6. Direct contact with consumers consumers

Yearly Periodic and perpetual Inventory Accounting - Periodic Inventory Accounting system means Updating Inventary at the end of a period, like at the end of month, quarter Half-yearly on a Where as with the perpetual inventory Accounting system we are continuously update the inventary Account each time When we buy con Sell Inventory. u Buying Enventosy 50.00 units @ $5 unit - Periodic perpetual 1. Begiring Inventory. 260,(5085) ano 3. purchase 800 units. Purchase $4000 Dr. Inventory $4000 0Y cash $4000 cash $4000 3. sells the units Account Rec $9000 AIR 9000 @ $ la unit Sales · 9000. Sales 9000 cons 3750 ...cours 3750 at end. Shows $500 Inventory 250 ** @ $ 5 lunit 4. Inventory count Inventory 3tho purchase, 4000 - NO Entry - Note y* - cours a Begining Inventory 250 purchase a 4000 o cons -hoovu ie, 3750 = cours ** updating eventory Account 10 no Entry regured as we update frequently,

* Gross profit margen percentage cross profit = Sales ☺ cost of woods sold cans) cross profit = Gross profit 100 Percentage Sales egy Sales = $300,000 , Gross progit = $ 100,000 ! Gap percentage = 100,000 Ⓡ100 = 33% 300.000 If cross profit increases yearly le, year 1: 33 % Year a: 40 % yeak 3: <a The above trend says that the gross profit percentage for increasing i that means the sales Volume also fereasing, vice-versa If Gross profit decreases yearly ie, Yeah ! : 42 %. Yeal L: 40% the year he spolume will geb decrease why ? y price of good is stable ut cost of goods sold increases, in that case the gross profit will decrease Sollution & Make a good deal with suppiles or try to reduce cons , then the gross propit marigen will back up agah **** 3