Multiple Choice
Which of the following best describes the primary source of revenue for service companies?
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4. Merchandising Operations
Service Company vs. Merchandising Company
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Which of the following differs between job costing and process costing?
A
The requirement to record revenues
B
The method of assigning costs to products
C
The use of financial statements
D
The need to track cash flows
Verified step by step guidance1
Understand the key difference between job costing and process costing: Job costing assigns costs to specific jobs or projects, while process costing assigns costs to processes or departments for mass production of similar items.
Recognize that the method of assigning costs to products is the primary distinction between the two systems. Job costing uses individual job cost sheets, whereas process costing uses departmental cost summaries.
Note that both job costing and process costing require recording revenues, using financial statements, and tracking cash flows. These aspects are common to both systems and are not the differentiating factor.
Focus on the concept that job costing is suitable for customized or unique products, while process costing is ideal for homogeneous products produced in continuous processes.
Conclude that the correct answer is 'The method of assigning costs to products,' as this is the fundamental difference between job costing and process costing.
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Service Company vs. Merchandising Company practice set
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