Merchandising businesses A merchandising business is any business that buys and sells products for the purpose of making a profit. Inventory is a collection of physical goods that a company has purchased or manufactured to sell to its customers. Cost of goods sold (COGS) is an expense account used to track the cost of the inventory that was sold during a particular period. Gross profit is the difference between sales revenue and cost of goods sold. Used to cover all operating expenses. Perpetual vs. Periodic Inventory Perpetual Inventory System - A system of accounting for inventory in which detailed records of the # of units and the cost of each purchase and sales transaction are prepared throughout the accounting period. The perpetual system updates inventory levels after every purchase and sale. Periodic Inventory System - Companies do not keep detailed inventory records of the goods on hand throughout the period. Instead, they The Perpetual Inventory System Gross Profit Margin: A Profitability Ratio Multistep Income Statement Closing Entries Controls Related to Inventory