When comparing a retail business to a service company, the financial statements

Question

When comparing a retail business to a service company, the financial statements changes the most is: O State of affairs C Statement of revenue and expenditure State equity owner Statement of cash flows C The main difference between a periodic inventory system is perpetual and one a.. Periodic determines the inventory available only at the end of the accounting period Periodic keeps a record showing the available inventory at all times Periodic provides an easy means to determine inventory shrinkage. Periodic records the cost of selling on the date of sale.

Explanation / Answer

The correct choice is : - The statement of revenue and expenditure

Explanation : - The revenue activities of a retail business consists of buying and selling merchandise. When the merchandise is sold, the revenue is reported as sales. In contrast, the revenue activities of a service business involves providing service to customers . These revenues are reported on the financial statement as fees earned.

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The correct choice is : - Periodic determines the inventory available only at the end of the accounting period

Explanation : - The main difference between a perpetual and periodic inventory system is that periodic system only updates the inventory and cost of goods sold account at the end of the accounting period. In contrast, a perpetual inventory system updates the inventory and cost of goods sold accounts continually as good are purchased or sold.

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