accounting?

Question

What items appear on the merchandising company statements that don't appear on the service company statements? why is there a difference?

Answer 1

Inventory.
Most service companies are cash basis so don't have accounts payable or accounts receivable they count income and espense when the cash moves not when the income or expense was incurred.
With a retail company they will have inventory for sale so an asset and will have beginnng and ending inventory on the income statement to get cost of goods sold. Retail is normally on an accrued basis so when you buy something it is an expense even if you still owe the money and when you sell something it is income even if you didn't get them money yet so you have payables and receivables.

Answer 2

Items that would appear on merchandising statements and not on services rendered statements are:

Sales

Sales discounts

Sales returns and allowances

Merchandise inventory

Cost of merchandise sold

Selling expenses


Some small business owners like doctors, lawyers and real estate brokers may use the cash basis of accounting because they have few receivables and payable's and their statements results are similar to the accrual basis.

And, many service related businesses use receivables and payable's. Receivables and payable's are NOT a distinguishing factor between merchandising and service related.

The difference in a merchandising and service related businesses is that in merchandising you're selling product, and in service related you're providing a service.