The major difference in the Balance Sheet between a service business and a merchandising business is:

Question

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The major difference in the Balance Sheet between a service business and a merchandising business is that the Balance Sheet of a merchandising business includes Inventory as a current asset, which represents the cost of the goods that the business has purchased but has not yet sold. Service businesses do not have inventory because they do not sell goods, making this the key difference between the two types of businesses. Option A is incorrect because Equipment is a long-term asset, not a current asset. Option B is incorrect because Prepaid Expenses can be found on the Balance Sheet of both service and merchandising businesses. Option D is incorrect because there are clear differences between the two types of businesses as explained above.

The Major Difference in the Balance Sheet Between a Service