In a merchandising company, Merchandise Inventory is classified as which type of account?

• A. Revenue account
• B. Long-term liability account
• C. Current asset account
• D. Owner’s equity account

Answer: (C)

Verified step by step guidance

1. Understand the nature of Merchandise Inventory: it represents goods that a merchandising company holds for sale to customers.
2. Recall the classification of accounts in the balance sheet: assets, liabilities, and owner's equity.
3. Identify that assets are resources owned by the company that provide future economic benefits.
4. Recognize that Merchandise Inventory is expected to be sold within the normal operating cycle, typically within one year.
5. Conclude that because Merchandise Inventory is a resource expected to be converted into cash or sold within a year, it is classified as a Current Asset account.