In financial accounting, merchandise inventory can best be described as:

• A. The total cost of services performed but not yet billed to customers by a service company
• B. Office supplies and other operating materials expected to be used within the next year
• C. Goods held for resale in the ordinary course of business by a merchandising company
• D. Long-term productive assets, such as equipment and buildings, used to generate revenue over multiple periods

Answer: (C)

Verified step by step guidance

1. Understand the context of merchandise inventory within financial accounting, which relates specifically to merchandising companies rather than service companies or asset management.
2. Recognize that merchandise inventory refers to goods that a merchandising company holds with the intention to sell them to customers as part of its normal business operations.
3. Differentiate merchandise inventory from other asset types such as office supplies (which are used internally) and long-term productive assets (which are used over multiple periods to generate revenue).
4. Recall that service companies do not have merchandise inventory because they provide services rather than goods, so costs related to services performed but not billed are classified differently (e.g., as accounts receivable or unbilled revenue).
5. Conclude that merchandise inventory is best described as goods held for resale in the ordinary course of business by a merchandising company.