The financial statements of a merchandising company will show:

Question

Quizplus · Accepted Answer

The financial statements of a merchandising company will show inventory as a current asset on the balance sheet. This is because a merchandising company buys and sells goods, so inventory is a major part of their business operations. However, the other choices are incorrect. A merchandising company's income statement will show gross profit, which is the difference between net sales and the cost of goods sold, but it won't include operating expenses. The income statement won't show cost of goods sold as a contra revenue account, but as a separate expense item. And while a merchandising company's financial statements may have some of the same accounts as a service company, they will also have additional accounts related to buying and selling goods, such as inventory and cost of goods sold.

The Financial Statements of a Merchandising Company Will Show