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

4. Merchandising Operations

Service Company vs. Merchandising Company

Financial Accounting

4. Merchandising Operations

Service Company vs. Merchandising 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

What is the primary difference between a merchant wholesaler and an agent in the context of merchandising companies?

An agent pays for the goods upfront, while a merchant wholesaler pays after selling the goods.

A merchant wholesaler only represents buyers, while an agent only represents sellers.

An agent stores inventory in warehouses, while a merchant wholesaler does not handle inventory.

A merchant wholesaler takes ownership of the goods, while an agent does not take ownership.

Previous problemNext problem

Verified step by step guidance

Understand the context: The question is about the roles of merchant wholesalers and agents in merchandising companies. These are two distinct types of intermediaries in the supply chain.

Define a merchant wholesaler: A merchant wholesaler is a business entity that purchases goods from manufacturers or suppliers, takes ownership of the goods, and then resells them to retailers or other businesses. Ownership means they bear the risks and rewards associated with the inventory.

Define an agent: An agent acts as an intermediary who facilitates transactions between buyers and sellers. Unlike a merchant wholesaler, an agent does not take ownership of the goods. Instead, they earn a commission or fee for their services.

Compare the two: The primary difference lies in ownership. A merchant wholesaler takes ownership of the goods, meaning they are responsible for the inventory and its associated risks. An agent, on the other hand, does not take ownership but acts as a representative for either the buyer or the seller.

Conclude: The correct answer is that a merchant wholesaler takes ownership of the goods, while an agent does not. This distinction is crucial in understanding their roles in the supply chain.