In the previous units, we learned about basic accounting principles that generally apply to all types of firms. In this unit we turn our attention to particular accounting concerns of merchant firms.

Because merchants are in many places among the most common type of business, and because there are special issues in accounting for merchandising operations, this subject merits special consideration.

No doubt all of you have merchants in the area where you live, you may often shop there, perhaps some of you may have even worked in a merchant shop. Think of a popular merchant near you. What type of merchandise do they stock? How do you think this merchant determines his or her cost of goods sold? Describe the method and "real" accounts.

I'm aware of what the cost of goods sold is but not sure on what factors could impact how one merchant derives the cost versus how another merchant might derive their cost. Please clarify on the method to derive COGS.