Unit 2: Corporate Merchandising Accounting & Inventory Systems

• The structural differences between service businesses and merchandising corporations
• How inventory functions as both an asset and an expense
• The components of Cost of Goods Sold (COGS)
• The difference between perpetual and periodic inventory systems
• How FIFO, LIFO, and Weighted Average impact net income and inventory valuation
• How special journals support efficiency in corporate environments
• The structure of corporate equity (common stock, retained earnings, dividends)

Students will:

• Record merchandising transactions using special journals
• Calculate Cost of Goods Sold under different inventory methods
• Compare FIFO, LIFO, and Weighted Average results
• Use Excel to analyze income differences across inventory methods
• Prepare financial statements for a merchandising corporation
• Analyze gross profit and its impact on business performance
• Apply payroll concepts within a corporate framework
• Identify how accounting method selection influences financial strategy

Students will complete a Corporate Merchandising Simulation that includes:

• Recording purchases, sales, and returns
• Applying an inventory cost flow method
• Preparing financial statements
• Calculating gross profit and analyzing results
• Writing a short professional recommendation explaining which inventory method benefits the corporation and why

Optional extension for rigor:

Students compare how financial statements would look under a different inventory method and analyze strategic implications.