Jonathan Gruenebaum Acct-505 Week 1 Summary
Threaded Discussion #1

1. The Difference in Income Statements of a Service Company Vs. a Merchandising Company

In a modern economy, sales revenue is the fuel that drives services, innovation and competition -- whether the income stems from a service company or a merchandising business. If you study an organization's income statement, you see things like revenues, cost of goods sold and administrative expenses -- all of which lead to net income or loss at the end of the reporting period.
Income Statement
When much of the economy struggles, you can look at corporation's income statement to figure out whether it's bowing to the overall negative environment or whether top leadership can maintain the business in profitable-company status. If the corporation is flourishing, you'll see that at the bottom of the statement of profit and loss -- an identical term for an income report, P&L or statement of income. Also known as the bottom line, net income equals total revenues minus total expenses. A net loss occurs if expenses exceed revenues.
Service Company
A service company is an organization that doesn't sell goods to make money, but rather relies on the analytical dexterity and innovation of its personnel to provide services that clients want and relish. Think of companies involved in investment banking, insurance, consulting, accounting and advisory and financial planning. In a service company's income statement, you typically see items, such as revenues, cost of services, sales and marketing and reorganization costs. You also note things like interest expense, fee income and provision for income taxes -- or income taxes, for short.
Merchandising Business
Merchandising consists of methods and tactics a business uses to sell products or provide services to retail customers. As a result, a merchandising