The Income Statements and Balance Sheets of Service, Retailing, and Manufacturing

Essay

The income statements and balance sheets of service, retailing, and manufacturing businesses tend to differ.
Required:
A. Which of these businesses will disclose a cost-of-goods-sold figure on the income statement? Why?
B. Briefly describe the difference between a retailing firm and manufacturer's disclosure of inventories on the balance sheet.
A. Retailers and manufacturers will disclose a cost-of-goods-sold figure because both of these entities sell goods. Service businesses, in contrast, do not given that such firms provide services.
A. Which of these businesses will disclose a cost-of-goods-sold figure on the income statement? Why?
B. A retailer will typically disclose inventories as one-line item entitled merchandise inventories. Manufacturers, on the other hand, carry three different types of inventories: raw materials, work in process, and finished goods.
B. Briefly describe the difference between a retailing firm and manufacturer's disclosure of inventories on the balance sheet.