{"id":188,"date":"2024-09-06T16:47:18","date_gmt":"2024-09-06T16:47:18","guid":{"rendered":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/chapter\/introduction-to-merchandising-business\/"},"modified":"2024-09-06T16:47:18","modified_gmt":"2024-09-06T16:47:18","slug":"introduction-to-merchandising-business","status":"publish","type":"chapter","link":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/chapter\/introduction-to-merchandising-business\/","title":{"raw":"Introduction to Merchandising Business","rendered":"Introduction to Merchandising Business"},"content":{"raw":"\n<h2>What you will learn to do: Identify issues unique to merchandising companies<\/h2>\nBusiness can be broken down into three major categories: merchandising, service, and manufacturing. So far, we\u2019ve focused on service businesses because they are, in most cases, the easiest to understand. A person or group performs a service, such as accounting, and gets paid. Manufacturing, on the other hand, can be a lot more complex. A manufacturing company buys raw materials and converts them into something else.\n\nFor instance, a company that buys blanks of ash, maple, and hickory from a lumberyard and turns the blanks, called \u201cbillets,\u201d on a lathe to create a baseball bat is a manufacturing business. The lumberyard is also a manufacturing operation. It buys logs, strips them of the bark, and saws them into usable dimensions. Even with advances in direct marketing in the past 20 years, it\u2019s still not likely that a manufacturer will also sell the item to the \u201cend user.\u201d Most likely, the manufacturer will brand the item by burning \u201cLouisville Slugger\" into the wood, for example, and load a massive amount of the product onto a rail car to deliver to a wholesale operation. That wholesaler will then deliver the bats in smaller batches to retailers like Walmart, Big5, and Amazon. These distributors act as intermediate merchandising operations because the wholesale business sells to a retail merchandiser, which then sells to the general public.\n\n<img class=\"aligncenter  wp-image-6305\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/5107\/2020\/10\/18182544\/MerchandisingBusinessFlow-1024x212.jpg\" alt=\"A flow chart from supplier to manufacturer, to distributor, to retailer, to customer.\" width=\"803\" height=\"166\">\n\nThere often isn\u2019t a clear line between the three categories. For instance, is McDonald\u2019s a manufacturer of burgers, or is it a merchandising company, or does it provide a service? You could argue for all three.\n\nIn this section, we\u2019ll focus on what is probably most familiar to you\u2014retail merchandising operations\u2014and we\u2019ll cover the three accounting issues that differentiate merchandising from service providers: inventory, cost of goods sold, and gross profit.\n","rendered":"<h2>What you will learn to do: Identify issues unique to merchandising companies<\/h2>\n<p>Business can be broken down into three major categories: merchandising, service, and manufacturing. So far, we\u2019ve focused on service businesses because they are, in most cases, the easiest to understand. A person or group performs a service, such as accounting, and gets paid. Manufacturing, on the other hand, can be a lot more complex. A manufacturing company buys raw materials and converts them into something else.<\/p>\n<p>For instance, a company that buys blanks of ash, maple, and hickory from a lumberyard and turns the blanks, called \u201cbillets,\u201d on a lathe to create a baseball bat is a manufacturing business. The lumberyard is also a manufacturing operation. It buys logs, strips them of the bark, and saws them into usable dimensions. Even with advances in direct marketing in the past 20 years, it\u2019s still not likely that a manufacturer will also sell the item to the \u201cend user.\u201d Most likely, the manufacturer will brand the item by burning \u201cLouisville Slugger&#8221; into the wood, for example, and load a massive amount of the product onto a rail car to deliver to a wholesale operation. That wholesaler will then deliver the bats in smaller batches to retailers like Walmart, Big5, and Amazon. These distributors act as intermediate merchandising operations because the wholesale business sells to a retail merchandiser, which then sells to the general public.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter  wp-image-6305\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/5107\/2020\/10\/18182544\/MerchandisingBusinessFlow-1024x212.jpg\" alt=\"A flow chart from supplier to manufacturer, to distributor, to retailer, to customer.\" width=\"803\" height=\"166\" \/><\/p>\n<p>There often isn\u2019t a clear line between the three categories. For instance, is McDonald\u2019s a manufacturer of burgers, or is it a merchandising company, or does it provide a service? You could argue for all three.<\/p>\n<p>In this section, we\u2019ll focus on what is probably most familiar to you\u2014retail merchandising operations\u2014and we\u2019ll cover the three accounting issues that differentiate merchandising from service providers: inventory, cost of goods sold, and gross profit.<\/p>\n","protected":false},"author":6,"menu_order":2,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Introduction to Merchandising Business\",\"author\":\"Joseph Cooke\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"}]","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"part":186,"module-header":"","content_attributions":[{"type":"original","description":"Introduction to Merchandising Business","author":"Joseph Cooke","organization":"Lumen Learning","url":"","project":"","license":"cc-by","license_terms":""}],"internal_book_links":[],"video_content":null,"cc_video_embed_content":{"cc_scripts":"","media_targets":[]},"try_it_collection":null,"_links":{"self":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/188"}],"collection":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/users\/6"}],"version-history":[{"count":0,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/188\/revisions"}],"part":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/parts\/186"}],"metadata":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/188\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/media?parent=188"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapter-type?post=188"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/contributor?post=188"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/license?post=188"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}