There are different ways in how two income statements are prepared. For example: the income statement (also known as P&L) of a merchandising company consists of Revenue, Expenses (related to the sales volume through the Cost of Goods Sold (COGS) and General & Administrative Expense (G&SA), which all result in Net Income. The income statement of a Service company consists of Service Revenue minus any Expenses related to that service, which results in Net Income.
Another way to look at it is that inventory never leaves the balance sheet until it is physically sold to a customer, which transfers it to Cost of Goods Sold.
Merchandising Companies purchase and sell directly and is ordinarily longer than a service company because of the inventory and its eventual sale lengthen the cycle, which differ merchandising and service companies.
servic provides merchindiezing sells
Why is the normal operating cycle for a merchandising company likely to be longer than for a service company?
do some research
Publix is a retail merchandiser.
list & describe the 3 form of business? describe each of the 3 types (service, merchandising & manufacturing) of business operation? Explain the difference between manufacturing & merchandising?
Merchandisers sell goods produced by manufacturers while service companies do not make or sell goods.
list & describe the 3 form of business? describe each of the 3 types (service, merchandising & manufacturing) of business operation? Explain the difference between manufacturing & merchandising?
Cost of goods sold and Gross profit
As you can see, in merchandising companies we have more special components of revenues and expenses than service companies. Besides, merchandising have two different systems periodic inventory system and perpetual inventory system. Each system has own way to count goods.
Retail company provides goods for you to buy... for example, clothing stores. Service company provides you a service... for example, a cable television provider.
Well if you look at it by the basics you will see both use the same Net income = revenue - expenses. However the income statement for the service company subtracts the operating expenses from the revenues to arrive at net income. The merchandising company subtracts the cost of merchandising from the revenue to arrive at gross profit. It then subtracts all other operating expenses to arrive at net income.