merchandise inventory account

merchandise inventory account is an essential account in accounting that tracks the value of a business’s inventory of goods for sale. This account is used to record the cost of merchandise purchased, as well as the cost of goods sold when items are sold to customers. Merchandise inventory is classified as a current asset on the balance sheet, and maintaining accurate records of this account is crucial for determining a business’s profitability and for tax purposes. Businesses typically use periodic or perpetual inventory systems to update their merchandise inventory account, depending on their sales volume and operational needs.