Accounting. How to prepare income statements

there are different ways in how two income statements are prepared. For type the income statement (also known as P&L) of a mathematical product troupe consists of Revenue, Expenses ( link up to the sales volume through the equal of Goods Sold (COGS) and General & administrative Expense (G&SA), which all result in Net Income. The income statement of a Service company consists of Service Revenue minus any Expenses related to that service, which results in Net Income. An different way to look at it is that stock list never leaves the respite sheet until it is physically sell to a customer, which transfers it to Cost of Goods Sold.The basic differences between the financial statements of a merchandising business and a service business include reporting cost of product sold on the income statement and the A. owners rectitude section of the balance sheet B. other income section of the income statement C. inclusion of merchandise caudex on the balance sheet as a current asset D . inclusion of an owners equity statement The primary difference in handling archive, accounts due and accounts receivable. In a merchandising company you will probably pick up inventory that needs to be valued.This can be done FIFO or LIFO ( showtime in first out, or last in first out) basis. The asset that your inventory represents can be offset by your accounts payable if you purchased inventory on account. At the end of the year for tax purposes you have to account for the change in your inventory value. In addition in a mechanizing company you may have to handle local sales taxes and such. In a service company there is no inventory and normally no local taxes on services sold. Distinguish the activities of a service business from those of a merchandising business.The primary differences between a service business and a merchandising business relate to gross activities. Merchandising businesses purchase merchandise for selling to customers. On a merchandising businesss income statement, revenue from selling merchandise is reported as sales. The cost of the merchandise sold is subtracted from sales to arrive at gross profit. The operating expenses are subtracted from gross profit to arrive at net income. Merchandise inventory, which is merchandise not sold, is reported as a current asset on the balance sheet.