A merchandiser's purchases are equivalent to a manufacturer's
A)cost of goods sold.
B)cost of goods manufactured.
C)raw materials inventory.
D)work in process inventory.

Question

Quizplus · Accepted Answer

A merchandiser's purchases are equivalent to a manufacturer's cost of goods manufactured, which includes the cost of direct materials, direct labor, and manufacturing overhead used in the production process. The cost of goods sold for a manufacturer includes the cost of goods manufactured plus any beginning inventory of finished goods, minus any ending inventory of finished goods. Raw materials inventory and work in process inventory are specific inventory accounts within a manufacturer's accounting system and do not apply to a merchandiser's purchases.

A Merchandiser's Purchases Are Equivalent to a Manufacturer's