Which one of the following accounts most likely would appear on the income statement of a merchandise company, but not on the income statement of a service company?
A) Income Tax Expense
B) Cost of Goods Sold
C) Selling Expenses
D) Administrative Expenses

Question

Quizplus · Accepted Answer

Cost of Goods Sold is an expense account that represents the cost of producing or purchasing the merchandise that is sold. This account is only necessary for a merchandise company, which sells physical goods, and not for a service company which provides services rather than physical goods. Income Tax Expense, Selling Expenses, and Administrative Expenses could all appear on the income statement of both merchandise and service companies.

Which One of the Following Accounts Most Likely Would Appear