But is retail accounting right for you? In this article, we’ll go over what you need to know about accounting for retail business, including which method to use, how to use it, and its pros and cons.
The importance of retail accounting
Retail accounting helps you track the cost of goods sold and the cost of sales of your business. It’s a simpler way to track inventory allowing you to get an estimate of your inventory costs.
It also helps you keep track of how much inventory you have left and how much your inventory is selling to maintain your inventory levels and potentially cut down on inventory costs.
Retail accounting methods
When doing retail accounting, there are a couple of different inventory valuation methods. The method you choose will depend on your business and what you sell.
Essentially, these methods assign a value to your inventory to find how much you have left in stock. They fall into two categories: cost accounting and retail accounting methods.
The cost accounting method calculates your inventory based on the price it costs you to buy them. The retail accounting method considers the price you sell your inventory.