Is merchandise inventory a long-term asset?

Merchandise inventory is reported as an asset. There are two main types of assets: current and non-current. Non-current assets include long-term investments, intangible assets like intellectual or technological property, and physical property and equipment.

What is merchandise inventory classified as on the balance sheet?

Also, merchandise inventory is classified on the balance sheet as a current asset. Fixed assets consist of property, plant, and equipment that are long-term in nature and are used to produce goods or services for the company.

Is merchandise inventory reported in the long-term assets section of the balance sheet?

Merchandise inventory is reported in the long-term assets section of the balance sheet. It is reported in the current assets section. Cash sales shorten the operating cycle for a merchandiser; credit sales lengthen operating cycles.

Is merchandise an asset?

Within accounting, merchandise is considered a current asset because it is usually expected to be liquidated (sold, turned into cash) within a year. When purchased, merchandise should be debited to the inventory account and credited to cash or accounts payable, depending on how the merchandise was paid for.

Is accounts payable a current asset?

No, accounts payable is not a current asset. A current asset is any asset that will provide an economic benefit for or within one year. Accounts payable is an amount that is owed to another party for goods that have been received but not yet paid for.

How is inventory listed on the balance sheet?

Inventory is recorded and reported on a company’s balance sheet at its cost. Cost of goods sold is likely the largest expense reported on the income statement. When the cost of goods sold is subtracted from sales, the remainder is the company’s gross profit.

What merchandise inventory balance is shown in the current asset section of a balance sheet?

Merchandise inventory (also called Inventory) is a current asset with a normal debit balance meaning a debit will increase and a credit will decrease. To determine the cost of goods sold in any accounting period, management needs inventory information.