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

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Multiple Choice

Which of the following best describes Dorsey Company if it manufactures three products?

Dorsey Company is a service company.

Dorsey Company is a manufacturing company.

Dorsey Company is a merchandising company.

Dorsey Company is a not-for-profit organization.

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Verified step by step guidance

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.