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

In general, the definition of a trading company is a form of company engaged in the trading of goods in which its main activity is buying, storing, and reselling merchandise for profit without adding value to these goods.

In other words, a trading company buys an item with the aim of reselling it at a higher price without the need to add value to the item. In this case what is meant by providing added value is to process, change the shape / nature of the goods, so that the sale value is higher.

The advantage obtained by the company is the difference in the price of buying and selling goods. As for several types of goods traded including;

  • Raw material
  • Semi-finished goods
  • Finished goods
  • Commodity goods
  • Industrial products

Also read: Definition of the Company

Characteristics and Characteristics of Trading Companies

A company’s form can be recognized by its characteristics and characteristics. The characteristics and characteristics of companies engaged in trade are as follows:

  1. Its main activity is buying, storing, and reselling merchandise.
  2. The company does not carry out a production process for goods sold.
  3. The profits derived from sales are less the purchase costs and operational costs.
  4. The form of business carried out is buying and reselling merchandise without any processing.
  5. Accounting activities at this company use an inventory account, where the calculation of cost of goods sold and income statement uses the single step and multiple step forms.

Also read: Manufacturing Companies

Types of Trading Companies

In general, the forms of companies engaged in trade can be divided into two types, namely:

1. Based on Empowered Products

  • Production Goods, namely companies that trade products in the form of raw materials as raw materials to make products or production equipment to produce new products. For example; lathes, threads, logs, and others.
  • Finished Goods, namely companies that trade in finished products or products that are ready for use by consumers. For example; clothes, television, tables and more.

2. Based on Types of Consumers

  • Large Companies (Wholesalers), namely companies that buy products directly from factories in large quantities, and how to sell them in large quantities as well. For example; wholesaler.
  • Intermediary Companies (Middleman), namely intermediary companies that buy merchandise in large quantities and resell to retail companies in moderation. Example; sub-wholesaler.
  • Retail company / retailer (retailer), which is a company that deals directly with end consumers where consumers can buy goods in retail. For example; supermarkets, kiosks, stalls.

Also read: Service Companies

Main Activities of Trading Companies

This form of company has several main activities that are interconnected with one another. Referring to the understanding described above, the main activities of the trading business are as follows:

  1. Purchases, namely company activities which include the purchase of company assets, purchase of merchandise, and purchase of other goods for business activities.
  2. Spending money, namely the activities of companies that spend money to buy goods / services, pay taxes, pay debts, and other needs related to business activities.
  3. Sales, i.e. the activities of a company selling merchandise to obtain income or profits.
  4. Receiving money, which is the company’s activities related to the sale of goods. Sales of goods will be accompanied by receipt of money obtained from payments, payments, receivables, sales of goods, and others.

Example of a Trading Company

There are many examples of trading companies around us, including the following:

No. Company name The type of company Goods for sale
1 PT. Bestoolindo Wholesaler Engineering Equipment / Mechanical Equipment. Kennedy, Senator, Sherwood, Oxford, Tuffsafe, Yamaloy, Edison, Matlock, Indexa, Osaki, Q-Torq, Atlas, Sherlock, and others.
2 PT Indomarco Prismatama (Indomaret) Retailers End consumer needs, ranging from basic, secondary and tertiary needs.
3 PT Matahari Putra Prima Tbk (Hypermart) Retailers Household needs for end consumers. Foodstuffs, clothing, etc.
4 PT Hero Supermarket Tbk (Hero Supermarket) Retailers End consumer goods. Foodstuffs, clothing, etc.

Also read: Understanding Stakeholders

Thus a brief explanation of the understanding of trading companies, characteristics, types, and examples. Hopefully this article is useful and broadens your horizons.

 

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