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 statement is true about job costing for service companies versus manufacturing companies?

Both service and manufacturing companies use job costing only for mass production of identical products.

Job costing in service companies focuses primarily on direct materials, whereas in manufacturing companies it focuses on direct labor.

Only manufacturing companies use job costing, while service companies use process costing exclusively.

Service companies use job costing to track labor and overhead costs for individual client projects, while manufacturing companies use job costing to track material, labor, and overhead costs for each production job.

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Verified step by step guidance

Understand the concept of job costing: Job costing is a method used to allocate costs to specific jobs or projects. It is commonly used in industries where products or services are customized or unique.

Differentiate between service companies and manufacturing companies: Service companies provide intangible services, while manufacturing companies produce tangible goods. This distinction affects how job costing is applied.

Analyze the focus of job costing in service companies: Service companies primarily track labor and overhead costs for individual client projects, as direct materials are often minimal or not applicable.

Analyze the focus of job costing in manufacturing companies: Manufacturing companies use job costing to track direct materials, direct labor, and overhead costs for each production job, as these elements are integral to producing goods.

Conclude that the correct statement is: Service companies use job costing to track labor and overhead costs for individual client projects, while manufacturing companies use job costing to track material, labor, and overhead costs for each production job.