Does a merchandising company require accounting information
Before we say that how a trading company accounts for transactions in its operating cycle, let us consider basic types of information that the company’s accounting system should be developed.
Merchandise Company requires accounting information which:
(1) Complete your financial reporting requirements
(2) To meet daily business operations, the needs of the privatization company, and
(3) Meetings of any particular reporting requirements, such as information required by income tax authorities.
Merchandising, merchandiser, accounting, transaction, accounting system, trading company
In order to meet your financial reporting requirements, a merchandising company should measure and record its revenue from the sales transaction, as well as the cost of goods sold. (Other types of revenues and expenses should also be registered, but this is done in a similar manner in the service-type business.) In addition, the accounting system must provide a complete record of the company’s assets and liabilities.
The information that appears in financial statements is very condensed. For example, the amount shown as the accounts received in the balance sheet represents the total accounts received on the balance sheet date. Managers and other company employees need more detailed accounting information than provided in financial statements. In billing customers, for example, employees of the company need to know the amount received from each credit customer. In addition, the accounting system will have to provide all the changes and the dates and amount of payments affecting each customer’s account.
In most cases, the information required for income tax purposes is parallel in the financial statements. In the subsequent posts, the differences between income tax rules and financial reporting requirements will be discussed.
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