What are the CLOSING PROCEDURES of a service based business and a merchandising business.

Solutions

Expert Solution

The main difference between a service industry company and a merchandising company is that the latter must stock inventory. Cost of Goods Sold will not be necessarily for a service based business but is necessary for the merchandising business. Both use the accounting equation: Assets = [Liabilities + Owner's Equity. For the closing procedures, whether monthly, quarterly or annually, accounts in the general ledger which needs the adjusting will be adjusted and the financial reports are prepared.

Both service based business and a merchandising business will be preparing Trial Balance for the period in beginning; an Adjusted Trial Balance at the period end after adjustments; the Income Statement, making the B/S and Statement of Owner's Equity, and the closing Trial Balance. The only difference will be the Cost of Goods Sold will be prepared only by the merchandising business because service based business don't deal with a physical inventory

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

compare and contrast the closing procedures for a service based business and the closing procedures for...

compare and contrast the closing procedures for a service based business and the closing procedures for a merchandising company

Compare and contrast accounting for a service-based business versus a merchandising business. What are some of...

Compare and contrast accounting for a service-based business versus a merchandising business. What are some of the accounts that are unique to the latter type of business? What is the difference between gross and net profit? Please provide one main post and two additional peer interactions. Your main post must be a minimum of 200 words

The major difference in the statement of retained earnings between a service business and a merchandising business is

The major difference in the statement of retained earnings between a service business and a merchandising business isthat the retained earnings statement of a merchandisi business shows the Cost of Goods Sold.B) that the retained earnings statement of a merchandising business includes Dividends.C) nothing. There are no differences between the two.D) that the retained earnings statement of a service business includes Dividends.

How is the accounting cycle different for a merchandising operation, as compared to a service business?...

How is the accounting cycle different for a merchandising operation, as compared to a service business? How do the asset, revenue and expense accounts differ? How does the multi-step income statement differ from a single step? Which format is better? Be sure to support your answer.

Describe how activities of a service and a merchandising business differ Describe the differences between the...

Describe how activities of a service and a merchandising business differ Describe the differences between the income statements of a service and a merchandising business What is the meaning of (a) 1/15, n/60; (b) n/30; (c) n/eom?

In compering the accounts of merchandising company with those of a the service company, what additional...

In compering the accounts of merchandising company with those of a the service company, what additional accounts would the merchandising company likely use, assuming it employs a perpetual inventory system

Identify the differences between service and merchandising companies.

2. Accounting procedures allow a business to evaluate their inventory costs based on two methods: LIFO...

2. Accounting procedures allow a business to evaluate their inventory costs based on two methods: LIFO (last in first out) or FIFO (first in first out). A manufacturer evaluated its finished goods inventory (in $000s) for five products with the LIFO and FIFO methods. To analyze the difference, they computed FIFO − LIFO for each product. We would like to determine if the LIFO method results in a lower cost of inventory than the FIFO method. Product FIFO (F) LIFO...

Accounting procedures allow a business to evaluate its inventory costs based on two methods: LIFO (Last...

Accounting procedures allow a business to evaluate its inventory costs based on two methods: LIFO (Last In First Out) or FIFO (First In First Out). A manufacturer evaluated its finished goods inventory (in thousands) for five products with the LIFO and FIFO methods. To analyze the difference, they computed (FIFO - LIFO) for each product. Based on the following results, does the LIFO method result in a lower cost of inventory than the FIFO method? Product FIFO LIFO 1 225...

Internal control procedures are important in every business. At what stage in the development of a...

Internal control procedures are important in every business. At what stage in the development of a business do they become especially critical. Discuss why this particular stage is so critical.

Subjects