What is Retail Accounting?
Retail accounting is the financial discipline for businesses that sell directly to consumers through stores or e-commerce. It tracks daily point-of-sale revenue, inventory movement, returns, promotions, and shrinkage, and links them to financial statements that comply with IAS 2 and IFRS 15.
How It Works
- Capture daily sales from POS terminals, split by product category, payment method, and VAT rate.
- Reconcile POS totals to cash deposits and card settlement reports.
- Track inventory using either the retail inventory method or the cost method.
- Recognise discounts, returns, and shrinkage as adjustments to revenue or inventory.
Saudi Context
Saudi retailers must issue Fatoora e-invoices integrated with ZATCA Phase 2 systems. VAT at 15% applies to most products. Retailers must keep daily Z-reports and integrate POS with their ERP, and ZATCA inspections may match POS data with declared VAT.
Example
A Jeddah supermarket reports SAR 200,000 daily sales (including 15% VAT). Net sales are SAR 173,913 and VAT collected is SAR 26,087. Inventory is reduced by cost of goods sold using the weighted-average cost method.