Select the incorrect statement regarding service companies.
A) Because service companies do not carry inventory, it is impossible to determine product costs.
B) Because the products of service companies are consumed immediately, there is no finished goods inventory on their balance sheets.
C) Managers of service companies are expected to control costs, improve quality, and increase productivity just like managers of manufacturing companies.
D) Material, labor, and overhead costs of service companies are treated as period costs.

Question

Quizplus · Accepted Answer

Service companies can determine product costs through the costs of their services, such as labor and overhead, even though they do not carry inventory. This makes statement A incorrect.

Select the Incorrect Statement Regarding Service Companies