In general, trading companies have various types of trading company transactions. For example, the types of trading company transactions vary, ranging from retail, wholesale, pre-order systems, and many others.
However, what is also important in sales transactions besides the type is inventory. Inventory in question is the inventory in the warehouse or in the store, namely raw materials or finished goods.
So, a company must have inventory stock because the company’s stock is a product that must be sold. With these products, it can be a source of company income which can be a trading company transaction.
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In addition, the inventory of goods in a company is also important because it has a direct influence on the company’s ability to generate income or income. So that a good Supply Chain Management (SCM) is needed in managing the stock of goods that are always in and out.
Therefore, companies should be able to manage inventory properly in order to be able to sell products according to targets and earn income according to company goals.
So, what are the types of transactions in a trading company? Before you know more about the types, let’s first look at the meaning of transactions in the following trading companies.
Definition of Trading Company Transactions
A trading company is a company whose main business is buying goods from suppliers and selling goods to consumers. Examples of trading companies are supermarkets and grocery stores.
You also need to know that the accounting used in goods companies is actually not too different from service companies. So, these two companies still record all transactions that occur in journals or general ledgers periodically.
Meanwhile, trading company transactions are company activities that create changes in the company’s financial position, for example, buying, selling, or paying for other transactions.
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Characteristics of a Trading Company
Besides being important to know the meaning of a trading company, you also have to know the characteristics of a trading company.
The first characteristic is that the company has the main activity of selling and buying goods. In addition, another characteristic is earning income from sales.
The next characteristic is that the company calculates the cost of goods sold first before calculating profits and losses.
Furthermore, the characteristics of a trading company are having general administration expenses and selling expenses as operating expenses.
Accounts in a Trading Company
Each company has its own account that is used, then what about trading companies? Here are some accounts in trading companies, including:
- The purchasing account functions as an account that holds the balance of all goods purchase transactions, both cash and credit transactions.
- The second account is purchase returns and price reductions which are used for all balances related to the return or price reduction transactions.
- The next account used in a trading company is the freight charges for purchases. This account functions as an account that holds all freight costs for purchasing goods.
- The next account is a sales account which functions to record all sales transactions, cash or credit.
- The final account used by a trading company is the sales discounts account.
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Types of Trading Company Transactions
So, now that you know the definition and characteristics of a trading company, let’s look at an explanation of the types of transactions that exist in the trading company below.
1. Purchase of Merchandise
The first type of transaction is the purchase of merchandise. As the name implies, this transaction occurs because of a product purchase from a goods provider, such as a shop, individual or company, and makes a purchase order
Goods purchase transactions are divided into 2 types, namely cash and credit. Prospective buyers can buy products in cash or credit.
2. Purchase Returns & Price Reductions
Purchase returns and price reduction transactions are transactions that occur due to product returns to the company.
These returns usually occur because there are items that are damaged, inappropriate, or defective.
3. Sale of Merchandise
In addition to purchases of merchandise, there are also sales transactions of merchandise.
This transaction occurs when there is an activity of selling goods to consumers, whether paid in cash or credit, which is recorded in the online bookkeeping application.
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4. Sales Returns & Price Reductions
Basically, the transactions of this one trading company are the same as transactions of sales returns and price reductions but from a different perspective.
In sales returns and price reduction transactions, the point of view is from the seller.
So, it is the company that takes the merchandise from the buyer because there is a defect, damage, or other things.
5. Sales & Purchase Discounts
Transactions in trading companies which are then sales and purchase discount transactions.
This transaction occurs when the company or the seller provides a discount or discount on the price of the products sold to consumers who pay off their receivables based on an agreed time.
6. Purchasing & Selling Freight Expenses
Other types of trading company transactions are buying and selling freight charges. This transaction of buying and selling freight costs is the cost borne by the buyer or trading company.
This is because a number of suppliers do not bear the cost of transporting goods from the warehouse to the company. Meanwhile, the cost of selling is the cost of transportation when sending merchandise to the buyer and is borne by the seller of the merchandise.
This is what causes the purchase and sale of freight load transactions in trading companies.
7. Merchandise Inventory
The next type of transaction that exists in a trading company is merchandise inventory.
In a trading company, merchandise inventory is goods or materials that the company uses for sales and operational activities.
In addition, merchandise inventory is one of the company’s crucial assets, so information about this is generally monitored very closely using the inventory application .
Therefore, trading companies must calculate and control merchandise inventory properly and regularly.
8. Debt Payment
Payment of debt is also one type of transaction that exists in a trading company. Debt payment transactions can occur when a company borrows money from another party (such as a bank) with the aim of obtaining venture capital.
In addition, trading companies generally have debts due to buying merchandise on credit.
If a company has debt, then it is best to pay off the debt in accordance with the agreement that has been agreed upon. It would be better if the company that has the debt pays before maturity.
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9. Receipt of Receivables
The last type of trading company transaction is the acceptance of debt. This transaction arises because there are sales on credit, thus creating receivables .What is a Trading Company Transaction? Definition and Types
This is why it is important for a trading company to always record debt acceptance transactions, so that there are no errors in paying these receivables.
If not, it is possible for errors and losses to occur for the company. If the company loses continuously, it will be threatened with not growing or even going bankrupt.
So, that’s a complete review of the meaning and types of trading company transactions that you need to understand and I hope this article can be useful.