Which of the following should a merchandiser do at the point of sale?

• A. Record the purchase of raw materials
• B. Record revenue and reduce inventory for the goods sold
• C. Allocate manufacturing overhead to products
• D. Recognize work in process inventory

Answer: (B)

Verified step by step guidance

1. Understand the role of a merchandiser: A merchandiser is a business that buys finished goods and sells them to customers. Unlike manufacturers, merchandisers do not deal with raw materials or work-in-process inventory.
2. Identify the key action at the point of sale: At the point of sale, the merchandiser needs to record revenue for the goods sold, as this is the moment when the transaction is completed and the earnings are recognized.
3. Understand inventory reduction: When goods are sold, the merchandiser must reduce the inventory account to reflect the decrease in stock. This ensures the inventory records are accurate and up-to-date.
4. Exclude irrelevant actions: Recording the purchase of raw materials, allocating manufacturing overhead, and recognizing work-in-process inventory are actions related to manufacturing businesses, not merchandisers. These options are not applicable in this scenario.
5. Summarize the correct process: At the point of sale, the merchandiser should record revenue for the goods sold and reduce the inventory account to reflect the sale. This aligns with the principles of financial accounting and ensures proper tracking of transactions.