Final answer:
The correct statement is that goods available for sale consist of merchandise inventory for merchandisers and work-in-process for manufacturers. Manufacturing companies report multiple inventory categories, while merchandisers report one. Inventory figures on the income statement help calculate the cost of goods sold.
Step-by-step explanation:
Which one of the following is true concerning manufacturing and merchandising companies' inventories? The correct statement among the provided options is: goods available for sale consist of merchandise inventory for merchandisers and work-in-process for manufacturers.
Manufacturing companies will report multiple categories for inventories, usually including raw materials, work-in-process, and finished goods. The value of these different inventory categories is based on the stage of production rather than the order of liquidity, and they are reported separately on the balance sheet. Merchandising companies typically have a single category for inventory on the balance sheet, named 'Merchandise Inventory'.
On the income statement, inventory figures are used to calculate the cost of goods sold, which is then subtracted from sales revenue to determine gross profit; total inventories are not subtracted from sales revenue as a whole. Thus, total inventories are not subtracted from sales revenue on the income statement for either type of company.