Accounting › Section E · Merchandising transactions › Topic E.3
Recording merchandise purchases
Buying stock is a merchandiser's largest routine transaction, and every return, allowance and early-payment discount changes what the goods really cost. This topic records purchases under a perpetual system, so each of those events flows straight into Inventory.
In this topic
- Why the cost of goods must be exact
- Cash and credit purchases
- Trade discounts and cash discounts
- Returns and allowances
- Worked example: a purchase, a return and an allowance
- Worked example: paying within the discount period
- Is the discount worth taking?
- The net method
- Common mistakes to avoid
- Key takeaways
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