When comparing the financial reporting for service providers and merchandisers, which of the following statements is correct regarding these two business entities?
A) Operating expenses are significantly different between service providers and merchandisers.
B) Merchandisers report merchandise inventory and cost of goods sold but service providers usually do not.
C) Both business entities report cost of goods sold, but only merchandisers report merchandise inventory.
D) Both business entities report merchandise inventory but only merchandisers report cost of goods sold.

Question

Quizplus · Accepted Answer

Merchandisers report merchandise inventory and cost of goods sold because they sell physical products. Service providers typically do not have merchandise inventory or cost of goods sold as they provide services rather than physical goods.

When Comparing the Financial Reporting for Service Providers and Merchandisers