Week 1
Question 1
Welcome to our Week 1 Discussions! To get us started, let's consider the following questions.

1) Would a traditional income statement differ depending on whether the business is a service organization, merchandiser, or manufacturer?

2) Could we use managerial accounting tools to assess the profitability of an organization other than a manufacturing business, or are the topics that we are learning only related to manufacturing?

3) If we could use these concepts in service and/or merchandising businesses, how would we go about doing so?

Let's start with the first question.

According to Casteele (2013), income statements are important to most business. It allows owners, managers, and shareholders to see how money is flowing into the company. This article also stated that service and manufacturing companies have several differences between their statements since the businesses have different types of expenses and different income sources. The article further explains, businesses adapt their income statements to their needs based upon the industry the business is in. A business in the service industry could not use the same income statement template as manufacturing industry businesses, because of the significant differences in how the businesses operate and earn money.

Casteele, J. (2013). The Difference Between Service and Manufacturing Income Statements. Retrieved from http://smallbusiness.chron.com/difference-between-service-manufacturing-income-statements-34551.html

Steven I agree.The income statement reports all revenues and expenses incurred during the period. Revenues minus the expenses equal net income. As an expense, the cost of goods sold appears on this statement and reduces the net income reported for the period. So I totally agree with you when you say the income statements prepared by the manufacturing company