Multiple Choice
Which of the following best describes merchandise inventory for a merchandising company?
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5. Inventory
Merchandising Company vs. Manufacturing Company
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Which type of company purchases inventory that is primarily in finished form and ready for resale to customers?
A
Service company
B
Manufacturing company
C
Holding company
D
Merchandising company
Verified step by step guidance1
Understand the different types of companies: Service companies provide intangible services, manufacturing companies produce goods from raw materials, holding companies own shares of other companies, and merchandising companies purchase finished goods for resale.
Identify the key characteristic of a merchandising company: It purchases inventory that is already in finished form and ready for resale to customers.
Compare this characteristic with the other types of companies: Service companies do not deal with inventory, manufacturing companies create goods from raw materials, and holding companies focus on investments rather than inventory.
Recognize that the correct type of company matching the description in the problem is a merchandising company.
Conclude that merchandising companies are the ones primarily involved in purchasing finished goods for resale, as opposed to producing or providing services.
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