Answer the following questions: From an accounting standpoint, discuss the major differences between a Service Business...

Answer the following questions:

From an accounting standpoint, discuss the major differences between a Service Business and a Merchandising Business?

Describe some accounts that impact one but not the other?

Solutions

Expert Solution

The following are the difference between merchandising company and Service Company

A merchandise business sells merchandise whereas Service Company sells services.
Goods Sold by merchandising business is tangible in nature whereas services rendered by service business are not tangible in nature.
The main source of revenue of merchandise business is the sale of merchandise known as sales revenue or sales whereas the main source of revenue of Service Company is service revenue by selling the services.

2) Describe some accounts that impact one but not the other?

Cost of goods sold has an impact on merchandising business whereas service business don’t have inventory therefore this account do not have any impact on service business.

Manufacturing account is used in merchandising business whereas this account do not have any impact on service business.

ekkarill92 answered 1 year ago

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