Which of following companies record revenues when selling inventory? Multiple Choice Service companies. Manufacturing companies. Merchandising companies. Both manufacturing and merchandising companies.
Question
Which of following companies record revenues when selling inventory?
Multiple Choice
Service companies.
Manufacturing companies.
Merchandising companies.
Both manufacturing and merchandising companies.
Solution
Both manufacturing and merchandising companies.
Here's why:
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Service companies: These companies do not sell inventory. They provide services to their customers, so they record revenues when the services are provided.
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Manufacturing companies: These companies produce goods and sell them to customers. They record revenues when the goods (inventory) are sold.
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Merchandising companies: These companies buy goods from manufacturers and sell them to customers. They also record revenues when the goods (inventory) are sold.
So, both manufacturing and merchandising companies record revenues when selling inventory.
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