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Service Company vs. Merchandising Company definitions Flashcards

Service Company vs. Merchandising Company definitions
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  • Service Company
    Business model focused on providing intangible services to customers, with revenue recognized upon completion of the service.
  • Merchandising Company
    Business that resells tangible goods purchased from suppliers, earning revenue when goods are delivered to customers.
  • Intangible Service
    Non-physical benefit provided to customers, such as tutoring or cleaning, with no transfer of physical goods.
  • Tangible Good
    Physical item transferred from seller to buyer, forming the basis of sales in merchandising companies.
  • Revenue Recognition Principle
    Accounting guideline requiring revenue to be recorded when a company fulfills its performance obligation, not when cash is received.
  • Journal Entry
    Formal accounting record documenting the financial impact of business transactions, affecting accounts like revenue or inventory.
  • Accounts Receivable
    Asset account representing amounts owed by customers for services or goods delivered on credit.
  • Service Revenue
    Income earned from providing services, recorded when the service is completed, regardless of payment timing.
  • Sales Revenue
    Income generated from selling goods, recognized when goods are delivered to the customer.
  • Cost of Goods Sold
    Expense account reflecting the direct cost incurred by a merchandising company to acquire goods sold to customers.
  • Inventory
    Current asset account representing goods held for resale by a merchandising company.
  • Matching Principle
    Accounting concept requiring expenses to be recorded in the same period as the related revenues to accurately reflect profitability.
  • Asset
    Resource owned by a company, such as cash, inventory, or accounts receivable, providing future economic benefit.
  • Equity
    Owner's residual interest in the assets of a company after deducting liabilities, increased by revenues and decreased by expenses.
  • Expense
    Outflow or using up of assets as part of operations, such as cost of goods sold in merchandising companies.