Explore the differences between service and merchandising companies by commenting on ONE of the following: Name...
Explore the differences between service and merchandising companies by commenting on ONE of the following:
- Name a new account specifically related to merchandising companies introduced in Chapter 5 and briefly explain the account.
- How is the income statement different for a merchandiser?
- How is the balance sheet different for a merchandiser?
Homework Answers
Merchandising companies are those companies that buys the product and resell them ,without changing the name or product . Basically it didn't manufacture them .Eg : Amazon , Wal-Mart etc...
Service Companies are those that provides services like Business Consulting Service , Financial Services , Banks etc.
Difference in Income Statement are as follows
1) COGS --Cost of Goods Sold.
The main difference in Income Statement of Service and Merchandise company is COGS . While Checking the Income Tax Statement for Bothe the companies there will be Account Cost of Goods Sold which will not be present in income statement of Service based companies.
Cost of Goods Sold is account which states the material cost and other direct expenses like distribution cost,freight cost etc. incurred for an product . Cost of Goods Sold is calculated as
Opening Stock + Purchases +Direct Expense - Closing stock.
2) Inventory
Other key differences is Inventory Account ,there will no Opening or Closing Inventory in Income Statement of Service based companies.
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Explore the differences between service and
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Name...
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