As we compare a merchandising business to a service business, the financial statement that changes the most is the balance sheet.

Question

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The income statement would be the financial statement that changes the most when comparing a merchandising business to a service business. This is because a merchandising business would have inventory as a significant asset on the balance sheet, while a service business would not have inventory. However, the income statement would reflect the differences in revenue and expenses between the two types of businesses.

As We Compare a Merchandising Business to a Service Business