The equivalent of finished goods inventory for a merchandising firm is referred to as
A) purchases.
B) cost of goods purchased.
C) merchandise inventory.
D) raw materials inventory.

Question

Quizplus · Accepted Answer

Merchandise inventory represents the finished goods inventory for a merchandising firm. It includes the cost of goods purchased and held for resale. Purchases and cost of goods purchased are not equivalent to finished goods inventory as they represent the cost of acquiring inventory but not the actual inventory on hand. Raw materials inventory is the equivalent of work-in-progress inventory for a manufacturing firm, and does not represent finished goods available for sale.

The Equivalent of Finished Goods Inventory for a Merchandising Firm