What is the difference between merchandise inventory and manufacturing inventory quizlet?

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What is the difference between merchandise inventory and manufacturing inventory?
What is considered merchandise inventory?
What is considered merchandise inventory quizlet?
What is not included in merchandise inventory?

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When using the periodic inventory system, a temporary account, Purchases, is used to accumulate the purchases transactions for the year. Inventory is not adjusted until the end of the accounting period. At the end of the accounting period, inventory is physically counted and cost of goods sold is determined by adding beginning inventory and purchases and then subtracting ending inventory. The inventory is then adjusted, cost of goods sold is recorded and the purchases account is closed.

The periodic inventory system is easy to use in that when goods are sold, the cost of goods sold does not have to be determined. Cost of goods sold is calculated by determining goods available for sale and then subtracting the actual ending inventory.

One of the primary disadvantages of the periodic system is that the business owner has no account of the amount of lost, stolen or damaged goods. Also, it is difficult to determine the amount of inventory on hand throughout the accounting period, since there is no running balance in the inventory account.

It is necessary to take a physical inventory at the end of the accounting period. That is the only way to determine the amount of ending inventory except for some estimation techniques.

What is the difference between merchandise inventory and manufacturing inventory?

The main difference between manufacturing inventory and merchandise inventory is that merchandise inventory has already completed the manufacturing process before reaching the merchant or retailer, whereas manufacturing inventory requires additional processing.

What is considered merchandise inventory?

Merchandise inventory includes all goods that have been purchased but not yet sold. This unsold inventory is categorized as a current asset on a company's balance sheet.

What is considered merchandise inventory quizlet?

Merchandise inventory is finished goods that are held for sale to customers. Costs that are included in "merchandise inventory" include the cost of the product, transportation-in costs, packaging costs, transit insurance, etc.

What is not included in merchandise inventory?

Current assets include all three types of inventory, but when calculating only the value of your merchandise inventory, you should not include: Raw materials. Work-in-process inventory. Goods that have been sold.