MANAGEMENT

Detailed explanation-1: -Answer choice: c. They purchase merchandise from a wholesaler and then turn around and sell the merchandise to the consumers. They do not manufacture a product from raw materials like a manufacturing company does. A service firm does not sell merchandise but instead sells services to customers.

Detailed explanation-2: -Explanation: Merchandising companies will have an asset for inventory, whereas service companies do not. This listed as a current asset.

Detailed explanation-3: -However, the Merchandising worksheet will include the following account titles and amount: accounts receivable, merchandise inventory, accounts payable, sales tax and purchases.

Detailed explanation-4: -Purchases-Used to record all purchases of merchandise for resale, this is one of the largest expense accounts of a merchandiser. It is classified as a cost of goods sold account.