Question

Which of the following would be included in the Inventory account on a merchandising company's balance sheet?

a) shipping costs from the manufacturer to the merchandising company
b) delivery costs
c) sales commissions
d) advertising costs

Answer 1

In a merchandising company's balance sheet, the Inventory account includes the cost of purchasing merchandise for resale. Shipping costs from the manufacturer to the merchandising company would be included in the Inventory account, while delivery costs, sales commissions, and advertising costs would not be included.

Step-by-step explanation:

In a merchandising company's balance sheet, the Inventory account includes the cost of purchasing merchandise for resale. Therefore, the cost of shipping from the manufacturer to the merchandising company would be included in the Inventory account. This is because it is part of the cost incurred in acquiring the inventory. On the other hand, delivery costs, sales commissions, and advertising costs would not be included in the Inventory account, as they are considered operating expenses and not part of the cost of inventory.