Differences Between Income Statement Manufacturing Merchandising Company

However the income statement for a manufacturing company is not all that much different than the income statement for a merchandising company.

Differences between income statement manufacturing merchandising company. I decided to use the same values as the previous example but note the differences in the accounts in blue. Explain the difference between a merchandising and a manufacturing income statement. Manufacturing versus merchandising income statements. The difference between a merchandising and a manufacturing income statement is in the cost of goods sold section.

Merchandising businesses sell goods. Sales revenue is the income generated from the sale of finished goods to consumers rather than from the manufacture of goods or provision of services. Most businesses can be classified into one or more of these three categories. Manufacturing companies clearly have more complex accounting systems to account for all the costs involved in producing products.

This simplified income statement demonstrates how merchandising firms account for their sales cycle or process. Now let s check out an income statement from the merchandiser s standpoint. Buylots merchandising company income statement for the year ended december 31 2020. Difference in merchandise service income statements.

The primary difference between a merchandising and a service based business is the presence of inventory. An income statement reflects your small business earnings and shows all the expenses incurred in. In merchandising company income statement there is no detailed cost of goods sold statement is prepared while in manufacturing company income statement detailed cost of goods sold statement is. Differences between a merchandisers income statement and a manufacturing companies income state.

Since a merchandising firm has to purchase goods for resale they account for this cost as cost of goods sold what it cost them to.