Describe Why Tracking Inventory Activities Are Necessary for a Merchandising

question 27

Essay

Describe why tracking inventory activities are necessary for a merchandising company.

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Definitions:

Accrual Accounting

An accounting method that records revenues and expenses when they are earned or incurred, regardless of when cash transactions occur.

Revenues Recorded

The act of documenting income generated from normal business operations, such as sales of goods or services, in the financial records.

Vertical Analysis

A financial analysis method in which each entry for each of the three major categories of accounts (assets, liabilities, and equity) in a balance sheet is represented as a proportion of the total account.

Financial Statement

A summary report that quantitatively describes the financial health of a company. This includes the balance sheet, income statement, and statement of cash flows.