Retail Accounting Method

A method by which a business can maintain and account for the value of its inventory. (For another method, see “Cost Accounting Method” in this glossary.) In the Retail Accounting Method, inventory is kept at its retail value. As items are added to inventory, they are marked up to reflect their retail price and the value of the inventory increases by that amount. As items are sold, the value of the inventory falls by an amount equal to the retail price of the items sold. Within your franchise, store merchandise is maintained by this method.