Which of the following goods would not be included in merchandise inventory for a purchasing company?
Goods in transit shipped FOB destination
Goods that would not be included in merchandise inventory for a purchasing company are goods that are sold to customers as soon as they are received. These types of goods are referred to as “consumable supplies” and are not held for resale and therefore are not included in merchandise inventory. Examples of consumable supplies include office supplies, cleaning supplies, and other items used in day-to-day operations of the business.
For example, if a company buys office supplies such as pens, papers, staplers, and glue, it would not be included in merchandise inventory. The reason being is that these supplies are not intended for resale, but rather for internal use by the company.
In summary, only goods that are purchased for resale should be included in merchandise inventory. Anything else, such as consumable supplies or assets purchased for use in the business operations, should not be included in merchandise inventory.
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