Which one of the following would appear on the income statement of a merchandising company,but not on the income statement of a service company?
A)Cost of goods sold
B)Selling and administrative expenses
C)Net sales
D)Income tax expense

Question

Quizplus · Accepted Answer

A merchandising company sells goods, and therefore incurs costs directly related to the purchase and/or production of these goods, which are recorded as cost of goods sold on the income statement. Service companies, on the other hand, generally don't have a cost of goods sold account, since they don't sell tangible items. The other options (B, C, and D) may appear on both types of companies' income statements.

Which One of the Following Would Appear on the Income