This document provides an overview of accounting procedures for merchandising companies. It explains that merchandising companies purchase inventory that they sell to customers, unlike service companies. The key accounting elements for merchandising companies are: 1) Tracking inventory levels over time using a merchandising inventory account 2) Calculating cost of goods sold (COGS) by subtracting ending inventory from the total cost of goods purchased 3) Determining gross profit and net income by subtracting COGS and other expenses from total sales revenue.