Which of the following items is included in merchandise inventory under both the perpetual and periodic inventory systems?

• A. Office supplies used by administrative staff
• B. Goods sold to customers but not yet delivered
• C. Goods held on consignment for another company
• D. Goods owned by the company and held for sale in the ordinary course of business

Answer: (D)

Verified step by step guidance

1. Understand the concept of merchandise inventory: Merchandise inventory includes goods that are owned by the company and are held for sale in the ordinary course of business. It does not include items like office supplies, goods sold but not yet delivered, or goods held on consignment for another company.
2. Review the perpetual inventory system: Under this system, inventory records are updated continuously as transactions occur. Merchandise inventory includes goods owned by the company and available for sale.
3. Review the periodic inventory system: Under this system, inventory records are updated at specific intervals, typically at the end of an accounting period. Merchandise inventory still includes goods owned by the company and available for sale.
4. Analyze the options provided: Office supplies used by administrative staff are not part of merchandise inventory because they are not held for sale. Goods sold to customers but not yet delivered are no longer owned by the company. Goods held on consignment for another company are not owned by the company, so they are excluded from merchandise inventory.
5. Conclude that the correct answer is: Goods owned by the company and held for sale in the ordinary course of business. This is the only item that qualifies as merchandise inventory under both the perpetual and periodic inventory systems.