Examples of Trading Companies: Definition, Characteristics, Types, and Characteristics

Examples of Trading Companies: Definition, Characteristics, Types, and Characteristics – In this discussion we will explain about trading companies. Which includes the definition of a trading company, the types of trading companies, the characteristics of a trading company and examples of a trading company that will be discussed in a complete and easy-to-understand way. For more details, please read the reviews below carefully.

Examples of Trading Companies: Definition, Characteristics, Types, and Characteristics

Let's discuss the definition of a trading company first.

Definition of Trading Company

A trading company is a company whose main activity is buying, storing, and reselling merchandise without adding value. In this case, added value is like processing and changing the nature or shape of the original goods in such a way that the goods have a high selling value.

In its operations, the trading company generates revenue but the revenue generated comes from the sale and purchase of goods. The main activity of a trading company is to buy and sell commodities in the form of raw materials, semi-finished goods or finished goods. In addition, traded goods consist of agricultural, plantation, forestry products, and processed or manufactured industrial products.

Trading Company Characteristics Perusahaan

Trading companies have the main activity of buying and selling merchandise. The merchandise can be in the form of raw materials, semi-finished goods and finished goods. Merchandise can be in the form of agricultural products, plantations, and industrial processing products (manufacturing).

Trading companies are known as “Trade Inventory” accounts. While service companies do not provide merchandise inventory accounts, because service companies do not sell and buy merchandise. Another difference can be seen from how to generate profits and losses.

A merchandising company's income statement is prepared by comparing sales with cost of goods sold. The difference between sales and cost of goods sold will result in a gross profit. To calculate net income, gross profit must be subtracted from administrative costs and selling expenses. In service companies, the profit and loss calculation does not include the cost of goods sold, but by calculating the difference between income and operating costs.

Types of Trading Companies

In trading companies, there are two types. The first is based on the official product and the type of consumer involved. The following are the types of trading companies, namely:

Based on the product being tricked

• Production Goods Trading Company is a company whose trading activities are in the form of raw material products of raw materials to make products or production tools to produce other products. Like logs and chainsaws
• Finished Goods Trading Company is a company whose trading activities are in the form of final products (finished goods) that are ready to be used for human consumption. Examples include books, shoes, sandals, computers, LED TVs, PCs and so on

Based on the types of consumers involved

• Large Trading Company (Wholesaler) namely companies that directly buy products from factories in large quantities. This company then sells these goods to several traders with intermediaries whose sales volume is quite large. For example wholesale
• Intermediary Trading Company (Middlemane) i.e. companies that make purchases in bulk and then resell them to retailers in moderate quantities. For example, a large trading company is a wholesaler.
• Retailer Trading Company (Retailer) namely companies that have direct relationships with consumers where consumers can buy retail or in the middle. For example, such as stalls, kiosks, supermarkets, minimarkets, department stores, and others.

There are various other types of trading companies based on their scope.

Based on the scope, trading companies are divided into two types, namely large traders and small traders.

• Wholesalers: These are traders who buy merchandise from producers and sell them to small traders in bulk.
• Small Traders: Are traders who buy goods from wholesalers and sell them to consumers in retail.

Trading Company Characteristics

The characteristics of a trading company are as follows:

• Forms of Traded Products
  Products traded in trading companies are tangible goods so that they can be felt. For example, furniture, rice, cupboards and so on.
• There is no change in the shape or nature of the product being traded
  The main behavior of a trading company is to buy and sell merchandise without any changes or additions to its form and nature.
• Special Account
  There are special accounts obtained by trading companies, such as accounts for cost of goods sold, merchandise stock, sales discounts and returns and so on.
• Profit or Loss Calculation
  The pattern of calculating profit and loss for trading companies is not the same as for service companies, because there is a special account. In service companies, profits are obtained by reducing income with expenses.

Trading Company Purpose

Maximize the profit that will be generated. Profit or profit is the difference between the amount received by the company to sell goods or services to customers and the amount spent to produce and sell goods or services.

Types of Trading Company Transactions

The types of transactions that often occur in trading companies include the following:

1. Purchase of merchandise on credit
2. Purchase of merchandise for cash
3. Purchase return
4. Discount
5. Purchase freight
6. Sales of merchandise on credit
7. Sales of merchandise for cash
8. Sales returns
9. Sales discounts

Trading Company Accounts

The following are special accounts of trading companies, namely:

1. Purchase: used as a record of the purchase of merchandise
2. Sales: used as a record of merchandise sales transactions
3. Purchase returns: used to record the return of merchandise that has been purchased.
4. Sales returns: used to record the return of merchandise that has been sold.
5. Purchase Discount: this is used to record receipt of discount from seller
6. Sales Discounts: this is used to record the receipt of discounts from buyers
7. Purchase Transportation Fee: used to record payment of transportation costs for goods that have been purchased
8. Sales Transportation Costs: used to record payments for the transportation costs of goods that have been sold.
9. Merchandise Inventory: used to record the value of merchandise inventory at a time / period.

In addition to the special accounts described above, trading companies have general accounts such as cash, equipment, equipment, capital, accounts receivable and so on.

Main Activities of Trading Company

The main activities of the Trading Company are as follows:

1. Purchasing, purchasing activities carried out in trading companies include the purchase of assets companies, purchases of merchandise, and purchases of other goods related to business activities that.
2. Spending Money, spending money is used to buy goods and services, pay taxes, pay off debts, expenses, and so on.
3. Sales, the company sells merchandise, the company will earn revenue.
4. Receipt of money, Sales of merchandise will be followed by receipt of money. Cash receipt transactions can be obtained from the settlement of receivables, sales of merchandise, and others.

Example of a Trading Company

Examples of trading companies are shops, showrooms, supermarkets, minimarkets, stalls, and so on.

Thus it has been explained about Examples of Trading Companies: Definition, Characteristics, Types, and Characteristics Hopefully it can add to your insight and knowledge. Thank you for visiting and don't forget to read our other articles.