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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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What is the difference between the income statement for a manufacturing firm and the income statement for a service firm?

To determine

State the differences between the income statement for a manufacturing firm and income statement for a service firm.

Explanation

Income Statement for Manufacturing Firm and Income Statement for Service Firm:

Under manufacturing firms, the income statement is prepared as per the traditional approach in which the operating income is computed by deducting the operating expenses from the gross margin. Under service firms, the income statement does not include the cost of goods sold as the process of product manufacturing does not take place.

The following table states the difference between the income statement for a manufacturing firm and income statement for a service firm:

Basis

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