Why is it necessary to adjust the merchandise inventory account at the end of an accounting period?

Adjusting the merchandise inventory account at the end of an accounting period is necessary to accurately reflect the company's financial position and performance. This adjustment ensures that the cost of goods sold is correctly calculated, which directly impacts net income. Additionally, it helps in complying with accounting principles, such as the matching principle, by aligning revenue with the expenses incurred during the period. Ultimately, this provides stakeholders with reliable financial statements for decision-making.