If a computer store purchases ready-made computers from a manufacturer, what category of inventory does it fall under?

• A. Finished goods
• B. Merchandise
• C. Work-in-progress
• D. Raw materials

Answer: (B)

Understanding inventory categories depends on who makes the product and where it sits in the production process. A computer store that buys ready-made computers from a manufacturer is not producing the items itself; it is purchasing them for resale. In accounting terms, these are merchandise inventory—the stock a retailer holds to sell to customers. The other categories describe goods still in production: raw materials are basic inputs not yet used, work-in-progress are items partially completed, and finished goods are products a company has completed for its own sales. Since the store’s role is to buy and resell, merchandise inventory is the correct classification.