Wal-Mart Stores, Inc., is the largest retailer in the world. The company has moved past Kmart, Sears, and other retailers by opening very large stores in out-of-the-way places. Another Wal-Mart advantage is its sophisticated perpetual inventory accounting system.

Evaluating a company's profitability

(Obj. 1, 6)

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You are the manager of a Wal-Mart store in Columbus, Ohio. Write a memo to a new employee Explaining the accounting for inventory by a retailer

(Obj. 2) that explains how the company accounts for the purchase and sale of merchandise inventory.