Conceptual objectives:

1. Describe merchandising activities and identify income components for a merchandising company.
2. Identify and explain the inventory asset and cost flows of a merchandising company.

Analytical objectives:

1. Compute the acid-test ratio and explain its use to assess liquidity.
2. Compute the gross margin ratio and explain its use to assess profitability.

Procedural objectives:

1. Analyze and record transactions for merchandise purchases using a perpetual system.
2. Analyze and record transactions for merchandise sales using a perpetual system.
3. Prepare adjustments and close accounts for a merchandising company.
4. Define and prepare multiplestep and single-step income statements.
5. Appendix 4A—Record and compare merchandising transactions using both periodic and perpetual inventory systems.