If a computer store purchases ready-made computers from a manufacturer, what category of inventory does it fall under?

If a computer store purchases ready-made computers from a manufacturer, what category of inventory does it fall under?

• A. Finished goods
• B. Merchandise
• C. Work-in-progress
• D. Raw materials

Answer: (B)

Understanding inventory categories depends on who makes the product and where it sits in the production process. A computer store that buys ready-made computers from a manufacturer is not producing the items itself; it is purchasing them for resale. In accounting terms, these are merchandise inventory—the stock a retailer holds to sell to customers. The other categories describe goods still in production: raw materials are basic inputs not yet used, work-in-progress are items partially completed, and finished goods are products a company has completed for its own sales. Since the store’s role is to buy and resell, merchandise inventory is the correct classification.

Understanding inventory categories depends on who makes the product and where it sits in the production process. A computer store that buys ready-made computers from a manufacturer is not producing the items itself; it is purchasing them for resale. In accounting terms, these are merchandise inventory—the stock a retailer holds to sell to customers. The other categories describe goods still in production: raw materials are basic inputs not yet used, work-in-progress are items partially completed, and finished goods are products a company has completed for its own sales. Since the store’s role is to buy and resell, merchandise inventory is the correct classification.