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

Net Sales

Financial Accounting

4. Merchandising Operations

Net Sales

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Multiple Choice

The goods a wholesale company purchases in finished form are referred to as what?

Work in process

Supplies expense

Raw materials

Merchandise inventory

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Verified step by step guidance

Understand the concept of 'Merchandise Inventory': Merchandise inventory refers to goods that a company purchases in finished form for resale to customers. These goods are ready for sale and do not require further processing.

Differentiate between the options provided: 'Work in process' refers to partially completed goods in production, 'Supplies expense' relates to consumable items used in operations, and 'Raw materials' are unprocessed materials used in manufacturing. None of these fit the description of finished goods purchased for resale.

Recognize that 'Merchandise Inventory' is the correct term for finished goods purchased by a wholesale company for resale. This inventory is recorded as an asset on the balance sheet until sold.

Understand the accounting treatment: When merchandise inventory is purchased, it is recorded as an asset. Upon sale, the cost of the inventory is transferred to 'Cost of Goods Sold' on the income statement.

Apply this knowledge to similar scenarios: Whenever a company purchases finished goods for resale, classify them as 'Merchandise Inventory' to ensure proper accounting treatment and financial reporting.