Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

5. Inventory

Merchandising Company vs. Manufacturing Company

Financial Accounting

5. Inventory

Merchandising Company vs. Manufacturing Company

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following should a merchandiser do at the point of sale?

Record the purchase of raw materials

Record revenue and reduce inventory for the goods sold

Allocate manufacturing overhead to products

Recognize work in process inventory

Previous problemNext problem

Verified step by step guidance

Understand the role of a merchandiser: A merchandiser is a business that buys finished goods and sells them to customers. Unlike manufacturers, merchandisers do not deal with raw materials or work-in-process inventory.

Identify the key action at the point of sale: At the point of sale, the merchandiser needs to record revenue for the goods sold, as this is the moment when the transaction is completed and the earnings are recognized.

Understand inventory reduction: When goods are sold, the merchandiser must reduce the inventory account to reflect the decrease in stock. This ensures the inventory records are accurate and up-to-date.

Exclude irrelevant actions: Recording the purchase of raw materials, allocating manufacturing overhead, and recognizing work-in-process inventory are actions related to manufacturing businesses, not merchandisers. These options are not applicable in this scenario.

Summarize the correct process: At the point of sale, the merchandiser should record revenue for the goods sold and reduce the inventory account to reflect the sale. This aligns with the principles of financial accounting and ensures proper tracking of transactions.