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Accounting Demystified by Jeffry R. Haber

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Chapter 17. Merchandising Companies

The examples we have used so far have not discussed some characteristics that are specific to merchandising companies. Service companies offer a service to the public, such as accounting, bookkeeping, legal, architecture, billing, or consulting services. They derive their revenue by providing these services, with the sale of any merchandise being incidental to their operations. In contrast, merchandising companies get their revenue from the sale of merchandise or goods. They may get some revenue from the sale of services, but this is incidental to their operations.

The differences between service companies and merchandising companies are reflected in the financial statements. On the Balance Sheet, there is ...

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