Retail accounting

A retail business is required to effectively track all transactions with goods, maintain the necessary reports and document its business activities. Retail requires quite thorough accounting, taking into account its individual aspects, in particular, the high intensity of business operations, recalculation of the cost of goods due to seasonal fluctuations in demand, taking into account the peculiarities of accounting for returns and exchanges. In this article, we will examine in detail the main components of retail accounting and identify the accounting entries that are most often used for this.

Components of retail accounting

Accounting encompasses a set of processes aimed at comprehensively reflecting economic activity, including:

• accounting for inventory (recording the receipt of each batch of products, their disposal, conducting inventories);
• accounting for revenue and settlements with customers (recording each sale, discounts, bonuses, returns);
• determining the cost of goods sold upon their disposal (requires the use of appropriate accounting methods);
• forming financial statements (balance sheet, financial statement and cash flow statement).

Below, we will examine in more detail each type of transaction that must be recorded in accounting documentation separately.

Inventory accounting

This process includes a set of procedures aimed at recording, evaluating and controlling the movement of goods at the enterprise, including:

• first, documenting the receipt of products with primary documents (as a rule, these are freight invoices, receipts, acceptance certificates);
• second, systematically conducting an inventory (the results are recorded in appropriate protocols or acts, and the frequency of the procedure is determined by the accounting policy);
• third, preparing commodity reports to reflect the movement of products for a certain period.

Inventory accounting

It is worth emphasizing that purchased goods are credited to the enterprise’s balance sheet at their original cost. The original cost includes the purchase price under the contract, the amount of import duty, indirect taxes, and transportation and procurement costs. Correct calculation is the key to success in retail accounting. Therefore, for certainty, we recommend that you seek online advice from an accountant at our law firm.

To reflect product receipts, subaccount 282 of account 28 “Goods” is used in accordance with the Instructions approved by the Ministry of Finance. This subaccount is intended for accounting for purchased goods that are held for sale in the enterprise’s retail network.

Accounting for the sale of goods in retail trade

The main stages of such accounting include:

1. using appropriate PRO/PRRO (a fiscal receipt is issued for each transaction);
2. conducting non-cash payments through Internet acquiring and other systems (each such transaction must be recorded in accounting systems based on the relevant bank statements);
3. daily summarization of the enterprise’s revenue (a separate report is generated, the data of which is transferred to accounting registers for summarization);
4. accounting for returns and discounts provided.

The method of accounting for products at selling prices is often used. In this case, subaccount 282 of account 28 “Goods” will reflect the selling price of the goods, which includes their original cost and the amount of the trade mark-up. It is also worth emphasizing that income from the sale of products is reflected in the credit of subaccount 702 with a simultaneous write-off of the cost price to the debit of subaccount 902.

There are two key methods of writing off trade mark-ups when selling goods at retail, in particular: direct write-off (the amount is written off by posting D-285 and K-282); reversal method (reverse correspondence according to D-282 and K-285 is used).

Important: the choice of a specific write-off method is determined by the accounting policy of the enterprise, which is approved by the manager and accountant, respectively. Contact the accountants of “Prikhodko and Partners” and receive high-quality development of the accounting policy for your enterprise.

Features of calculating the cost of goods for retail accounting

According to the National Accounting Standard 9 “Inventories”, enterprises can use several methods to determine the cost of products:

1. weighted average cost method – determined by dividing the total cost of the remaining goods in the warehouse by their total quantity;
2. FIFO method – the cost of goods sold is determined by the cost of the first batches received in time, and the balance of goods at the end of the period is estimated at the cost of the last batches received;
3. LIFO method – the cost is determined by the cost of the last batches received in time, and the balance at the end of the period is estimated at the cost of the first batches received (in practice, it is rarely used).

The selected method must be justified and applied consistently throughout the reporting period.

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