Question

Which of the following accounts appears on the income statement of a merchandising firm but not a service firm?

A) Salaries and wages expense

B) Depreciation expense

C) COGS

D) Net income

Answer 1

The account that appears on the income statement of a merchandising firm but not a service firm is Cost of Goods Sold (COGS), which represents the cost of merchandise purchased for resale.

Step-by-step explanation:

The account that appears on the income statement of a merchandising firm but not a service firm is Cost of Goods Sold (COGS). This account reflects the direct costs attributable to the production of the goods sold by a company.

For a merchandising firm, this would include the cost of merchandise purchased for resale, which is not relevant for a service firm since they do not sell physical products.

Service firms only account for expenses related to the services they provide, such as salaries and wages expense, depreciation expense, and other operating expenses.

Therefore, COGS is specific to merchandising firms and not included in the income statement of service firms.