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1. How Does Income Measurement Differ Between A Merchandising And A Service Company?

477 Words2 Pages

Alan Ma - Accounting 114 Professor Galletta
Homework #9 10/3/2017
Read Chapter 5 - Questions (page 242) 4, 6, 7, 17, 18 4. How does income measurement differ between a merchandising and a service company? A merchandising company’s primarily focuses on the merchandise of tangible products, while a service company offers labor for a price. These differences change the way we measure income, because we have to consider depreciation on the merchandise we are selling. On the contrary, a service company is exempt from depreciation due to their intangibility. Measuring these two companies require a different set of procedures to get an accurate result. We can also consider that there would be two different types of expenses, a merchandising company would regard the cost of the goods sold. While a servicing company evaluates the operating expenses for their services. Although measuring income for companies can be similar, it is apparent that there are subtle differences. …show more content…

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