0:00:00.880,0:00:04.560

All right chapter four. Everything that

0:00:03.199,0:00:05.040

we've talked about up to this point has

0:00:04.560,0:00:07.359

been

0:00:05.040,0:00:09.280

really the foundation of accounting you

0:00:07.359,0:00:10.000

need to really know chapters one through

0:00:09.280,0:00:12.559

three

0:00:10.000,0:00:14.160

very well because everything from for on

0:00:12.559,0:00:15.360

is just we're going to expand our

0:00:14.160,0:00:16.640

knowledge from what we talked about in

0:00:15.360,0:00:17.840

one through three so it's very important

0:00:16.640,0:00:19.520

that you get one through three first

0:00:17.840,0:00:20.960

because that is the foundation

0:00:19.520,0:00:22.400

now starting now we're just going to

0:00:20.960,0:00:23.840

take bits and pieces of what we talked

0:00:22.400,0:00:24.720

about that and expand our knowledge on

0:00:23.840,0:00:26.160

that a little bit more

0:00:24.720,0:00:27.840

look at different methods or different

0:00:26.160,0:00:29.199

ways that we do things there become a

0:00:27.840,0:00:30.640

little bit more specific,

0:00:29.199,0:00:32.320

and so in this chapter we're going to

0:00:30.640,0:00:33.840

take the idea of revenue

0:00:32.320,0:00:35.600

and kind of expand our knowledge on it

0:00:33.840,0:00:36.880

in a different way. If you remember

0:00:35.600,0:00:37.200

everything we talked about up to this

0:00:36.880,0:00:38.879

point

0:00:37.200,0:00:40.480

our revenue has been really a service

0:00:38.879,0:00:42.480

revenue consulting revenue or something

0:00:40.480,0:00:45.520

that we've done a service for

0:00:42.480,0:00:46.960

but how do we recognize when we actually

0:00:45.520,0:00:48.320

provide a product

0:00:46.960,0:00:49.760

that adds a whole new layer of

0:00:48.320,0:00:50.960

accounting so that's what we're going to

0:00:49.760,0:00:52.960

be talking about in this chapter with

0:00:50.960,0:00:54.719

merchandising businesses.

0:00:52.960,0:00:56.000

So merchandising business, what is a

0:00:54.719,0:00:58.079

merchandising business, and I'm sure

0:00:56.000,0:00:59.359

you're pretty familiar with what that is

0:00:58.079,0:01:01.039

but a merchandising business is a

0:00:59.359,0:01:02.000

business that generates revenue by

0:01:01.039,0:01:03.440

selling goods

0:01:02.000,0:01:05.600

they sell the product they sell

0:01:03.440,0:01:07.439

inventory. There's two types of

0:01:05.600,0:01:08.560

merchandising businesses, okay, we have

0:01:07.439,0:01:10.479

what's called a

0:01:08.560,0:01:12.159

wholesale company and a wholesale

0:01:10.479,0:01:15.280

company sells its inventory

0:01:12.159,0:01:16.720

to other uh businesses, okay, they buy

0:01:15.280,0:01:17.520

products and sell to other retail

0:01:16.720,0:01:19.600

companies.

0:01:17.520,0:01:21.520

And then we have what's called a retail

0:01:19.600,0:01:24.080

company and a retail company

0:01:21.520,0:01:26.000

buys or buys products to sell to the end

0:01:24.080,0:01:27.920

user or the consumer they sell it to

0:01:26.000,0:01:29.119

us, so I'm sure you can think of a lot of

0:01:27.920,0:01:30.479

different businesses that follow up

0:01:29.119,0:01:31.600

under retail business because that's

0:01:30.479,0:01:34.240

what we normally

0:01:31.600,0:01:34.720

see but you may be able to uh to get

0:01:34.240,0:01:36.240

some

0:01:34.720,0:01:37.759

you know examples think of some examples

0:01:36.240,0:01:39.280

that deal with wholesale companies as

0:01:37.759,0:01:40.240

well.

0:01:39.280,0:01:43.119

Now when you're dealing with

0:01:40.240,0:01:43.759

merchandising business you have another

0:01:43.119,0:01:45.680

type of

0:01:43.759,0:01:47.759

account that you have to worry about, the

0:01:45.680,0:01:49.520

goods that we sell those products

0:01:47.759,0:01:51.280

those products that we sell are what we

0:01:49.520,0:01:53.040

call merchandise inventory that is

0:01:51.280,0:01:54.399

actually the account name merchandise

0:01:53.040,0:01:56.640

inventory, it is

0:01:54.399,0:01:58.000

inventory because the intent is to sell

0:01:56.640,0:01:59.840

not for us to use

0:01:58.000,0:02:01.360

if we purchase something with our intent

0:01:59.840,0:02:03.040

to use then that would

0:02:01.360,0:02:05.600

probably be considered a supply of some

0:02:03.040,0:02:06.799

sort but because the intent is to sell

0:02:05.600,0:02:08.319

we're going to call these inventory and

0:02:06.799,0:02:09.440

that's what makes merchandise inventory

0:02:08.319,0:02:12.560

inventory.

0:02:09.440,0:02:14.400

Inventory is the account used for

0:02:12.560,0:02:15.680

uh products that a company owns and

0:02:14.400,0:02:16.160

intends to sell just like I was talking

0:02:15.680,0:02:17.599

about,

0:02:16.160,0:02:19.520

sometimes you're going to be required to

0:02:17.599,0:02:20.879

use the actual full term merchandise

0:02:19.520,0:02:22.319

inventory sometimes they'll just let you

0:02:20.879,0:02:24.080

shorten it down to inventory they mean

0:02:22.319,0:02:25.680

more or less the same thing I'm probably

0:02:24.080,0:02:26.800

going to be using inventory more or less

0:02:25.680,0:02:28.959

on all these these

0:02:26.800,0:02:29.920

examples anyway so but they are pretty

0:02:28.959,0:02:32.160

much the same so

0:02:29.920,0:02:33.760

but that's what a merchandise inventory

0:02:32.160,0:02:36.239

is as we progress we're going to talk

0:02:33.760,0:02:37.920

about kind of how we deal with the

0:02:36.239,0:02:39.840

journalizing of merchandise inventories

0:02:37.920,0:02:42.800

or merchandise businesses.

0:02:39.840,0:02:42.800

So, take care.