Financial Accounting–Inventory & Merchandising Transactions

Mastering Inventory Accounting: From Merchandising Transactions to Cost Flow Assumptions

Created by: Robert (Bob) Steele
CPA, CGMA, M.S. Tax, CPI

What Will I Learn?

• Understand and process various types of merchandising transactions, including the purchase and sale of inventory.
• Comprehend and apply knowledge of sales discounts, purchase discounts, sales returns, allowances, and inventory shrinkage.
• Calculate and interpret the cost of goods sold in different types of businesses.
• Differentiate between perpetual and periodic inventory systems and identify the pros and cons of each.
• Understand what is included in the cost of inventory, including freight costs, insurance costs, and discounts.
• Grasp inventory flow assumptions such as specific identification, first in first out (FIFO), last in first out (LIFO), and weighted average methods.
• Apply FIFO, LIFO, and weighted average methods under both periodic and perpetual inventory systems.
• Recognize the intricacies and challenges of inventory tracking.
• Prepare and interpret financial statements of a merchandising company.
• Solve comprehensive problems covering the full accounting cycle for a merchandising company, including recording financial transactions, adjusting entries, and
• Improve their test-taking skills and tackle multiple choice questions and short calculation questions related to inventory accounting.

Requirements

• We should have a basic understanding of financial accounting and debits and credits.

Target audience

• Business and accounting students seeking to deepen their understanding of inventory management and merchandising transactions, whether they are beginners or in advanced stages of their studies.
• Professionals in the fields of accounting, finance, or business management who deal with inventory and merchandising transactions as part of their work.
• Entrepreneurs and small business owners who handle their own accounting and inventory management, and want to ensure they are doing it correctly and efficiently.
• Anyone preparing for a job that involves managing inventory or dealing with merchandising transactions, and wants to bring a solid foundation of knowledge to their role.
• Individuals interested in understanding more about the financial operations of a business, particularly those related to the buying and selling of inventory.