Question

Major differences between service companies and retail or manufacturing companies is that retailers and manufacturers must account for

A- cost of goods sold.
B- current assets.
C- liabilities.
D- inventory.

Answer 1

Service companies do not have inventories or need to account for the cost of goods sold, while retail and manufacturing companies do.

Step-by-step explanation:

Service companies differ from retail or manufacturing companies in terms of the items they need to account for in their financial statements.

Service companies do not have inventories since they do not produce physical goods. Instead, they provide services to customers. This means that service companies do not have to account for the cost of goods sold and inventory in their financial statements.

Retail and manufacturing companies, on the other hand, need to account for the cost of goods sold and inventory. The cost of goods sold represents the expenses incurred to produce the goods sold during a specific period, while inventory represents the goods that have been produced but have not yet been sold. These items are important for retail and manufacturing companies as they directly impact their profitability and financial statements.