Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Net Sales

Financial Accounting

4. Merchandising Operations

Net Sales

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Multiple Choice

Why might a company carry inventory?

To reduce the need for cash flow management

To increase the amount of net sales reported on the income statement

To avoid recording cost of goods sold

To ensure products are available for sale to meet customer demand

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Verified step by step guidance

Understand the purpose of inventory: Inventory represents goods or materials a company holds for the purpose of resale or production. It is a key asset that ensures the company can meet customer demand.

Recognize the role of inventory in customer satisfaction: By carrying inventory, a company ensures that products are readily available for sale, which helps avoid delays in fulfilling customer orders and maintains customer trust.

Clarify why inventory is not related to reducing cash flow management needs: Inventory requires cash investment, and managing inventory effectively is part of cash flow management rather than reducing its need.

Explain why inventory does not directly increase net sales: While inventory availability can support sales, net sales are determined by actual transactions with customers, not the mere presence of inventory.

Highlight why inventory does not avoid recording cost of goods sold: Cost of goods sold is recorded when inventory is sold, and carrying inventory does not eliminate this accounting requirement.