Which of the following is TRUE for a service company?
A) Expenses are all period costs.
B) Income statement includes gross profit.
C) Expenses are all inventoriable product costs.
D) Balance sheet includes finished goods inventory.

Question

Quizplus · Accepted Answer

For a service company, all expenses are considered period costs, which means they are expensed in the period they are incurred rather than being inventoried like product costs. The income statement still includes gross profit (revenues minus cost of services provided), but there is no inventory or finished goods to report on the balance sheet.

Which of the Following Is TRUE for a Service Company