This book is the second of seven books which introduces the basic principles of accounting, focusing primarily on liquid assets. It introduces enhanced income statements, sales, cash discounts, the control structure, and inventory accounting. Details concerning cash and highly-liquid investments, cash management, controls for cash receipts and disbursements, and bank account reconciliations are discussed. Accounts receivable, costs and benefits of selling on credit, considerations for uncollectible receivables, notes receivable and interest are also discussed. In addition, the fundamentals of inventory costing methods, inventory management, and ratio analysis are introduced.

1. Part 1. Special Issues for Merchants
2. The Merchandising Operation - Sales
   1. Sales
   2. Sales Returns and Allowances
   3. Trade Discounts
   4. Credit Cards
   5. Cash Discounts
3. Purchase Considerations for Merchandising Business
   1. Merchandise Acquisition
   2. Periodic Inventory System
   3. Purchase Returns and Allowances
   4. Cash Discount
   5. Gross Recording of Purchases/Discounts
   6. Net Recording of Purchases/Discounts Lost
   7. Comparison of Gross vs. Net
   8. Freight Charges
   9. The Calculation of Net Purchases
   10. Cost of Goods Sold
   11. Detailed Income Statement for Merchandise Operation
   12. Closing Entries
4. Alternative Inventory System
5. Income Statement Enhancements
   1. Analysis of a Detailed Income Statement
6. The Control Structure
   1. Internal Control in the Merchandising Environment
   2. Internal Control and the Purchasing Cycle
   3. Generalizing About Control
7. Part 2. Cash and Highly-Liquid Investments
8. Cash Composition
   1. Cash Equivalents
9. Cash Management
   1. Strategies to Enhance Cash Flows
10. Bank Reconciliation
    1. Comprehensive Illustration of Bank Reconciliation
    2. Proof of Cash
11. Petty Cash
    1. Replenishment of Petty Cash
    2. Cash Short and Over
    3. Increasing the Base Fund
12. Trading Securities
    1. An Illustration
    2. Rationale for Fair Value Accounting
    3. Alternative: A Valuation Adjustments Account
    4. Dividend and Interest
    5. Derivatives
13. Part 3. Accounts Receivable
14. The Costs and Benefits of Selling on Credit
    1. Credit Sales
    2. Credit Cards
15. Accounting for Uncollectible Receivables
    1. Direct Write-off Method
16. Alternative Approaches for Uncollectible
    1. Determining the Allowance Account
    2. Writing off Uncollectible Accounts
    3. Collection of an Account Previously Written off
    4. Matching Achieved
    5. Monitoring and Managing Accounts Receivable
17. Notes Receivable
    1. Accounting for Notes Receivable
    2. A Dishonored Note
    3. Notes and Adjusting Entries
18. Part 4. Inventory
19. The Components of Inventory
    1. Determining Which Goods to Include in Inventory
20. Inventory Costing Methods
    1. Determining the Cost of Ending Inventory
    2. Costing Methods
    3. First-in, First-out Calculations
    4. Last-in, First-out Calculations
    5. Weighted-Average Calculations
    6. Preliminary Recap and Comparison
    7. Detailed Illustrations
    8. FIFO
    9. LIFO
    10. Weighted-Average
    11. Comparing Inventory Method
    12. Specific Identification
21. Perpetual Inventory Systems
    1. Perpetual FIFO
    2. Journal Entries
    3. Perpetual LIFO
    4. Moving Average
22. Lower of Cost or Market Adjustments
    1. Measuring Market Value
    2. Application of the Lower-of-Cost-or-Market Rule
23. Inventory Estimation Techniques
    1. Gross Profit Method
    2. Retail Method
24. Inventory Management
25. Inventory Errors