Final answer:
The line item found on a merchandiser's income sheet and not on a service firm's is the cost of goods sold. Both types of firms may have sales revenue, depreciation expense, and service revenue may appear exclusively on a service firm's income sheet. For the self-check question, the firm's accounting profit is $50,000.
Step-by-step explanation:
The line item that would be found on a merchandiser's income sheet and not on a service firm's income sheet is c) cost of goods sold. This is because merchandising companies sell physical goods and thus incur direct costs related to the purchase and preparation of goods for sale. A service firm, on the other hand, mainly provides services and does not deal with tangible products that can be sold; therefore, they would not have a 'cost of goods sold' entry on their income statement.
Sales revenue and depreciation expense are common to both merchandisers and service firms, as they all generate revenue and may have fixed assets that depreciate over time. Service revenue would be specific to service firms, as they do not sell physical goods.
SELF-CHECK QUESTIONS
If a firm had sales revenue of $1 million last year and spent $600,000 on labor, $150,000 on capital, and $200,000 on materials, the firm's accounting profit would be the remaining balance after these expenses are subtracted from the sales revenue. To calculate the profit:
- Total Expenses = Labor + Capital + Materials
- Total Expenses = $600,000 + $150,000 + $200,000 = $950,000
- Accounting Profit = Sales Revenue - Total Expenses
- Accounting Profit = $1,000,000 - $950,000 = $50,000