How is the inventory in a merchandising business different from the inventory in a manufacturing business? In a merchandising business, there is work-in-process inventory, in a manufacturing business there is no work-in-process inventory. In a merchandising business, final inventory cost includes materials, labor and overhead; in a manufacturing business final inventory cost includes only the original purchase cost of the inventory. In a manufacturing business, there is just one category of inventory, in a merchandising business there are three categories of inventory. in a merchandising business, there is just one category of imventory; in a manufacturing business there are three categories of inventory. With a perpetual inventory system, how are inventory purchases and sales recorded? Inventory records are not updated when a sale is made; only the dollar amount of the sale is recorded. inventory records are updated whenever a purchase or a sale is made. Sales are reported only when cash is collected; no accounts receivable are recorded. Inventory records are not updated when a purchase is made; only the dollar amount of the purchase is recorded. Increase in liabilities Increase in assets Decrease in liabilities Increase in expenses