Certain Merchandise That a Firm May Acquire May Be Inventory

question 52

Essay

Certain merchandise that a firm may acquire may be inventory or supplies.Accounting treats them differently as to the matching criteria used.
Required:
a.Describe the situation where merchandise would be considered inventory. How would the firm account for the costs of the merchandise?
b.Describe the situation where merchandise would be considered supplies. How would the firm account for the costs of the merchandise?

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Definitions:

Advertising Strategy

A plan devised to communicate with the target market and persuade them to buy a product or service through various advertising media.

Institutional Advertising

A type of advertising that aims to promote a company’s image or reputation rather than selling a specific product or service.

Goodwill Advertising

A marketing effort aimed at promoting the positive image or social responsibility of a company, enhancing its public goodwill rather than directly selling products or services.

Immediate Sales

Immediate sales refer to transactions that occur on the spot without any delay, often involving cash or direct payments.