Multiple Choice
Which of the following statements about merchandise in a merchandising company is correct?
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5. Inventory
Merchandising Company vs. Manufacturing Company
Multiple Choice
Which of the following best describes Dorsey Company if it manufactures three products?
A
Dorsey Company is a service company.
B
Dorsey Company is a manufacturing company.
C
Dorsey Company is a merchandising company.
D
Dorsey Company is a not-for-profit organization.
Verified step by step guidance1
Understand the definitions of the different types of companies: A service company provides intangible services, a manufacturing company produces goods from raw materials, a merchandising company sells finished goods, and a not-for-profit organization operates without the goal of making a profit.
Identify the key information in the problem: Dorsey Company manufactures three products. This indicates that the company is involved in the production of goods from raw materials.
Compare the characteristics of a manufacturing company with the description of Dorsey Company. Manufacturing companies typically transform raw materials into finished goods, which aligns with the activity of producing three products.
Eliminate the other options: Dorsey Company is not a service company because it does not primarily provide intangible services. It is not a merchandising company because it does not sell finished goods purchased from suppliers. It is not a not-for-profit organization because the problem does not mention any non-profit activities.
Conclude that Dorsey Company is best described as a manufacturing company based on the information provided and the definitions of the company types.
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