Service companies use a "cost of goods sold,inventory,and purchases" budget to calculate the amount of merchandise to purchase.

Question

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Service companies do not sell physical merchandise, so they do not have a cost of goods sold or inventory. Therefore, they do not use a budget to calculate the amount of merchandise to purchase. Instead, they may use a budget to track expenses related to providing their services, such as employee wages, rent, and office supplies.

Service Companies Use a "Cost of Goods Sold,inventory,and Purchases" Budget