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 what is included in merchandise inventory for a merchandising company?

Office supplies and equipment

Goods purchased for resale that are still on hand at the end of the period

Work in process and finished goods

Raw materials used in the production process

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Verified step by step guidance

Understand the concept of merchandise inventory: Merchandise inventory refers to goods that a merchandising company has purchased for resale to customers. It includes items that are still on hand at the end of the accounting period.

Eliminate options that do not fit the definition: Office supplies and equipment are not part of merchandise inventory because they are not intended for resale. Similarly, raw materials, work in process, and finished goods are associated with manufacturing companies, not merchandising companies.

Focus on the correct option: Goods purchased for resale that are still on hand at the end of the period are included in merchandise inventory. This aligns with the definition of merchandise inventory for a merchandising company.

Relate the concept to the accounting cycle: Merchandise inventory is reported as a current asset on the balance sheet and plays a role in calculating the cost of goods sold (COGS) during the period.

Summarize the importance: Proper classification of merchandise inventory ensures accurate financial reporting and helps the company assess its profitability and inventory management efficiency.