What is meant by the team Merchandise in accounting
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Within accounting, merchandise is considered a current asset because it is usually expected to be liquidated (sold, turned into cash) within a year.
When purchased, merchandise should be debited to the inventory account and credited to cash or accounts payable, depending on how the merchandise was paid for.
If the goods or products are purchased by a customer within the same accounting period as the merchandise is purchased, the cost should be transferred to cost of goods sold, recorded on the income statement as an expense within the period the sale was made.
If the goods or products are not sold within that accounting period, the cost should remain on the balance sheet as a current asset until it is sold.
If the market value of merchandise falls below its recorded cost, you should reduce the cost to match the current market value, and record the difference as an expense.
When purchased, merchandise should be debited to the inventory account and credited to cash or accounts payable, depending on how the merchandise was paid for.
If the goods or products are purchased by a customer within the same accounting period as the merchandise is purchased, the cost should be transferred to cost of goods sold, recorded on the income statement as an expense within the period the sale was made.
If the goods or products are not sold within that accounting period, the cost should remain on the balance sheet as a current asset until it is sold.
If the market value of merchandise falls below its recorded cost, you should reduce the cost to match the current market value, and record the difference as an expense.
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Definition: Merchandise, often called inventory, is a good or product that a retailer purchases and intends to sell for a profit. ... Anything that is on the sales floor for sale is consideredmerchandise because it's a product that they are hoping to sell to customers for a profit.
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