Financial Accounting: E5-1 Mr. Wellington has prepared the following list of statements
Financial Accounting E5-1 Mr. Wellington has prepared the following list of statements about service companies and merchandisers.Instructions Identify each statement as true or false. Measuring net income for a merchandiser is conceptually the same as for a service company. For a merchandiser, sales less operating expenses is called gross profit. For a merchandiser, the primary source of revenues is the sale of inventory. Sales salaries is an example of an operating expense. The operating cycle of a merchandiser is the same as that of a service company. In a perpetual inventory system, no detailed inventory records of goods on hand are maintained. In a periodic inventory system, the cost of goods sold is determined only at the end of the accounting period. A periodic inventory system provides better control over inventories than a perpetual system.