In inventory components, which item is merchandise?

• A. Raw materials used in production.
• B. Work in process in the factory.
• C. Finished goods ready for sale.
• D. Merchandise: goods bought for resale.

Answer: (D)

In inventory accounting, merchandise refers to goods purchased for resale without further processing. This category is what a retailer or trading company holds to sell to customers, so no additional production steps are needed.

The other categories describe items used or produced within a manufacturing process: raw materials are the inputs used to make products, work in process are goods that are partially through production, and finished goods are completed products ready to be sold. Merchandise inventory, by contrast, stays in its purchased form until it’s sold.