Which of the following best describes the primary difference between brokers and agents versus merchant wholesalers in accounting?

• A. Merchant wholesalers only represent buyers, while brokers and agents only represent sellers.
• B. Brokers and agents facilitate sales without taking ownership of goods, while merchant wholesalers purchase and own the goods they sell.
• C. Brokers and agents provide financing to buyers, whereas merchant wholesalers do not.
• D. Brokers and agents are responsible for manufacturing goods, while merchant wholesalers are not.

Answer: (B)

Verified step by step guidance

1. Understand the roles of brokers and agents: Brokers and agents act as intermediaries in transactions, facilitating sales between buyers and sellers without taking ownership of the goods. Their primary function is to connect parties and assist in negotiations.
2. Understand the role of merchant wholesalers: Merchant wholesalers purchase goods from manufacturers or suppliers and take ownership of these goods. They then sell the goods to retailers or other businesses, often storing and managing inventory.
3. Compare the ownership aspect: Brokers and agents do not take ownership of the goods they facilitate sales for, whereas merchant wholesalers do take ownership of the goods they sell.
4. Analyze the financing aspect: Brokers and agents typically do not provide financing to buyers, as their role is limited to facilitating transactions. Merchant wholesalers may offer credit terms to buyers as part of their sales process.
5. Clarify the manufacturing responsibility: Neither brokers and agents nor merchant wholesalers are responsible for manufacturing goods. Brokers and agents focus on connecting parties, while merchant wholesalers focus on purchasing and reselling goods.