Which of the following statements regarding merchandise inventory is not true?
A)Merchandise inventory is reported on the balance sheet as a current asset.
B)Merchandise inventory refers to products a company owns and intends to sell.
C)Merchandise inventory may include the costs of freight-in and making them ready for sale.
D)Merchandise inventory appears on the balance sheet of a service company.
E)Purchasing merchandise inventory is part of the operating cycle for a business.

Question

Quizplus · Accepted Answer

Merchandise inventory only appears on the balance sheet of a merchandising company, which is a company that buys and sells goods. A service company, which provides services instead of selling goods, does not have merchandise inventory. Therefore, statement D is not true.

Which of the Following Statements Regarding Merchandise Inventory Is Not