C & C Power Lines is a subcontractor that works on public utilities.Which of the following is a key characteristic that makes it distinctively a service company?
A)It does not maintain inventories.
B)Its products are tangible.
C)Its product costs appear below the line in computing gross margin.
D)All of its costs are period costs.

Question

Quizplus · Accepted Answer

C & C Power Lines does not maintain inventories, which is a key characteristic of service companies. Service companies do not produce tangible products that can be stored in inventory, unlike manufacturing companies.

C & C Power Lines Is a Subcontractor That Works