Merchandise Purchases

Merchandise Purchases - The goods that a trading business purchases for the period of resale, or all goods bought exclusively for the purpose of resale. During the year this account is treated as an asset. However, its locations on the chart of accounts indicates that it is actually an expense, the assumption being that as the goods were bought for resale they represent expenses. Goods that were actually sold become part of the calculation of cost of goods sold, which is an expense category.