Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Service Company vs. Merchandising Company

Financial Accounting

4. Merchandising Operations

Service Company vs. Merchandising Company

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Multiple Choice

Which type of costing system would a service company most likely use compared to a merchandising company?

A service company would most likely use a process costing system, while a merchandising company uses job order costing.

Both service and merchandising companies primarily use job order costing systems.

Both service and merchandising companies primarily use process costing systems.

A service company would most likely use a job order costing system, while a merchandising company typically does not use either job order or process costing.

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Verified step by step guidance

Understand the difference between job order costing and process costing: Job order costing is used when products or services are customized or unique, while process costing is used for mass production of identical items.

Identify the nature of a service company: Service companies typically provide customized services tailored to individual clients, which aligns with the characteristics of job order costing.

Consider the nature of a merchandising company: Merchandising companies purchase goods for resale and do not produce goods or services, so they typically do not use job order or process costing systems.

Match the costing system to the company type: A service company would most likely use a job order costing system due to the customized nature of its services, while a merchandising company does not use either job order or process costing.

Conclude that the correct answer is based on the alignment of costing systems with the operational characteristics of service and merchandising companies.