Describe service, merchandising, and manufacturing companies
What will be an ideal response?
Service companies sell intangible services such as insurance, consulting, banking, and healthcare. Salaries and wages include 70% of their costs. They usually do not have inventory or cost of goods sold accounts, although some service companies will have a small amount of supplies inventory which is used for their own use and not for sale to customers. Merchandising companies resell tangible products they purchase from suppliers. Retailers and wholesalers include both types of merchandising companies. Merchandisers have inventory. Manufacturing companies use labor, plant and equipment to convert raw materials into finished products that they sell to other companies. The three types of inventory include: raw materials inventory, work in process inventory, and finished goods inventory.
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The use of the allowance method to record bad debts expense violates the matching principle
Indicate whether the statement is true or false
For many individuals, commencing business operations is easiest via the establishment of _______.
A. a Partnership B. a Private Corporation C. a Sole Proprietorship D. a Public Corporation E. none of the above