merchandise inventory is what type of account

merchandise inventory is what type of account refers to an account used by businesses to track the value of their inventory of goods intended for resale. Merchandise inventory is classified as an asset account on the balance sheet. This account includes the cost of all unsold products or items that a company has purchased and is holding in stock. As goods are sold, their value is moved from the merchandise inventory account to the cost of goods sold (COGS) account. Proper management of the merchandise inventory account is essential for accurate financial reporting and tax purposes, as it directly impacts the business’s profitability.