财务会计课件 from Professor CarterChapter08Word文档格式.docx

1、 In terms of the accounting equation, merchandise inventory is an asset, as shown below. The numbers in parentheses refer to the chapters in which the items are discussed.AssetsCurrent AssetsCash and cash equivalents （6）Accounts receivable （7）Allowance for Uncollectible Accounts （7）Merchandise inven

2、tory （8）=Liabilities+Stockholders EquityRevenuesSales （7）Sales Returns & Allowances （7）Operating ExpensesUncollectible Accounts Expense （7）Bank Service Expense （6）Other Revenues & ExpensesInterest Revenue （6）Interest Expense （6） The amount of merchandise inventory differs from company to company and

3、 from year to year within a given company. For example, Wal-Mart, the largest retail company in the United States, reported merchandise inventory of $33.2 billion on January 31, 2010. This $33.2 billion was approximately 19% of Wal-Marts January 31, 2010 total assets. Aeon, the largest retail compan

4、y outside of the United States, reported merchandise inventory of 334 billion yen on February 28, 2010. The 334 billion yen was approximately 9% of Aeons February 28, 2010 total assets. One year earlier, on January 31, 2009, Wal-Marts merchandise inventory was $34.5 billion or approximately 21% of W

5、al-Marts total assets.Merchandising: An Overview The following paragraphs briefly describe how merchandise inventory affects merchandising companies by discussing one part of the operations of the Matthew Sporting Goods Company. As you may remember from Chapter 7, the Matthew Sporting Goods Company

6、sells sporting equipment and supplies to youth organizations. The following paragraphs are restricted to only that part of the companys operations relating to the sale of customized baseball shirts. Each shirt is imprinted with a teams name and logo. As shown in Exhibit 8-1, there are four steps inv

7、olved with the companys merchandise inventory （baseball shirts）: （1） the purchase of merchandise from suppliers, （2） the sale of merchandise to customers, （3） the collection of cash from customers, and （4） the payment of cash to suppliers. As will be shown, the Matthew Sporting Goods Company attempt

8、s to increase its resources through these four steps.Exhibit 8-1Matthew Sporting Goods CompanyMerchandising Operations2AStep 1: purchase merchandise on credit from suppliers In order to sell baseball shirts to customers, the Matthew Sporting Goods Company must purchase the shirts from other companie

9、s. These other companies could also be merchandising companies or they could be companies that make the shirts, called manufacturers. Although the Matthew Sporting Goods Company does purchase some products by paying cash, the vast majority of its purchases are on credit. That is, the company buys me

10、rchandise by promising to pay for it in the near future, often within 30 days. As a result of buying merchandise on credit, the companys resources （assets） increase, as shown in Exhibit 8-1 by the arrow indicating resources coming into the company （Step 1）. Since the source of these resources was cr

11、editors, the companys liabilities, called accounts payable, also increase. If the company buys 100 shirts at a cost of $24 per shirt, the effects of step 1, the purchase of merchandise from suppliers, can be summarized as follows.Total ResourcesSources of Borrowed ResourcesSources of Owner Invested

12、ResourcesSources of ManagementGenerated Resources purchase of merchandise on credit+ $2,400Step 2: sell merchandise on credit to customers When the Matthew Sporting Goods Company sells some of its shirts to customers, two things happen simultaneously: the companys resources decrease when the shirts

13、go to the customers and the companys resources increase when the customers either pay for the shirts or promise to pay for the shirts in the near future. Remember, the companys business is to sell products, not give them away! Because knowledge of each of these two effects is important to managers,

14、the sale of products to customers is separated into its two parts: the decrease in resources when the shirts go to customers and the increase in resources when the customers pay or promise to pay for the shirts. The flow of merchandise to customers When the Matthew Sporting Goods Companys shirts go

15、to its customers, the obvious effect is a decrease in the companys resources, as shown in Exhibit 8-1 by the arrow indicating resources going out of the company （Step 2, part 2A）. Consistent with our treatment of resources in previous chapters, this decrease may be viewed as a result of management u

16、sing up some resources. The resources （shirts） were not sent to creditors, nor were they distributed to owners. The resources （shirts） were used up by management in the performance of managements responsibility for operating the company. When management uses up resources in the operation of the comp

17、any, such uses are reported as expenses. With merchandise inventory, the “using up” of shirts by them going to customers is reported as a decrease in merchandise inventory and an increase in an expense called the cost of goods sold. Since expenses decrease stockholders equity, the ultimate result of

18、 shirts going to customers is a decrease in resources （assets） and an equal decrease in stockholders equity （through the increase in the cost of goods sold “expense”）. If all 100 of the Matthew Sporting Goods Companys shirts go to its customers, the effects can be summarized as presented as step 2A

19、below. Since each of the shirts cost the company $24, the resources decrease and stockholders equity decrease are $2,400 （100 x $24）.Sources of Management Generated Step 2A: flow of merchandise to customers （expense）- $2,400Totals$0 The flow of promises （accounts receivable） from customers At the sa

20、me time the Matthew Sporting Goods Companys customers receive the shirts, they must give something in return to the company. Usually customers give either cash or promises of cash. Thus, the company receives either cash or accounts receivable. In either case, the obvious effect is an increase in the

21、 companys resources, as shown in Exhibit 8-1 by the arrow indicating resources coming into the company （Step 2, part 2B）. Consistent with our treatment of resources in previous chapters, this increase may be viewed as a result of management generating resources. The resources （cash or accounts recei

22、vable） were not borrowed from creditors nor invested by owners. The resources were generated by management in the performance of managements responsibility for operating the company. When management generates resources in the operation of the company, such generations are reported as revenues. With

23、the sale of products to customers, the receipt of cash or accounts receivable from customers is reported as an increase in cash or accounts receivable and an increase in a revenue called sales. Since revenues increase stockholders equity, the ultimate result of the receipt of cash or accounts receiv

24、able from customers is an increase in resources （assets） and an equal increase in stockholders equity （through the increase in sales “revenue”）. If the 100 shirts of the Matthew Sporting Goods Company were sold to its customers on credit, at a price of $37 each, the effects can be summarized as pres

25、ented as step 2B below. The resource increase and the stockholders equity increase are $3,700 （100 x $37）.Step 2B: flow of accounts receivable from customers （revenue）+ $3,700+ $1,300Step 3: collect cash from customers Within a very short time, often 30 days or less, the Matthew Sporting Goods Compa

26、ny collects cash from customers to whom it sold shirts on credit. As a result, as cash increases and accounts receivable decrease, the companys resources increase and decrease by the same dollar amount, as shown in Exhibit 8-1 by the arrows at Step 3. If the Matthew Sporting Goods Company collects all of its accounts receivable from its c