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

All of the following budgets are prepared by merchandising companies except:

Direct Materials Budget

Cash Budget

Sales Budget

Selling and Administrative Expense Budget

Previous problemNext problem

Verified step by step guidance

Understand the nature of merchandising companies: Merchandising companies purchase finished goods for resale rather than manufacturing products. Therefore, they do not require budgets related to production or raw materials.

Review the types of budgets typically prepared by merchandising companies: These include the Cash Budget, Sales Budget, and Selling and Administrative Expense Budget, which are essential for planning and managing operations.

Identify the Direct Materials Budget: This budget is specific to manufacturing companies as it involves planning for the purchase and usage of raw materials required for production. Merchandising companies do not produce goods, so this budget is not applicable to them.

Compare the given options: Analyze each budget listed in the problem and determine whether it aligns with the operations of a merchandising company. The Direct Materials Budget stands out as unrelated to merchandising activities.

Conclude that the Direct Materials Budget is the correct answer: Since merchandising companies do not deal with raw materials or production, they do not prepare a Direct Materials Budget, making it the exception among the listed budgets.