Merchandising

Definition

Merchandising involves purchasing finished goods and reselling them to consumers. It covers activities such as inventory management, pricing, and promotional strategies to attract customers.

5 Must Know Facts For Your Next Test

1. Merchandising companies typically have inventory accounts including merchandise inventory.
2. These firms' primary costs include the cost of goods sold (COGS) and operating expenses.
3. Revenue is generated through the sale of purchased goods without further processing or production.
4. Examples of merchandising organizations include retail stores and wholesalers.
5. Merchandising organizations require strong logistics and supply chain management to maintain adequate stock levels.

Review Questions

• What are the primary costs associated with merchandising companies?
• How do merchandising organizations generate their revenue?
• Give two examples of merchandising organizations.

Related terms

Manufacturing: Involves converting raw materials into finished products through labor and machinery.

Service Organizations: Provide intangible products or services rather than tangible goods.

Cost of Goods Sold (COGS): Represents the direct costs attributable to the production or purchase of the goods sold by a company.