Merchandising business

Definition

A merchandising business is a type of enterprise that purchases goods for the purpose of reselling them to customers at a profit. These businesses can operate either as wholesalers or retailers.

5 Must Know Facts For Your Next Test

1. Merchandising businesses record inventory as a significant asset on their balance sheets.
2. Revenues in merchandising businesses are generated primarily through the sale of goods.
3. Cost of Goods Sold (COGS) is a critical expense item for merchandising businesses, representing the direct costs attributable to the production of the goods sold.
4. Gross profit in a merchandising business is calculated by subtracting COGS from total sales revenue.
5. Merchandising businesses frequently use inventory management systems to track stock levels and reorder products as needed.

Review Questions

Related terms

inventory:

Goods and materials that a business holds for the ultimate goal of resale.

Cost of Goods Sold (COGS): The direct costs incurred in producing the goods sold by a company.

wholesaler: A type of merchandising business that buys goods in bulk from manufacturers and sells them to retailers or other businesses.