Chapter 4, Problem 2DQ

To determine

Merchandising Companies:

Merchandising companies refer to those companies which are dealing in sale of products to a retail buyer.

Service Companies: These are those companies which are engaged in rendering of different services instead of selling physical products. A good example of service company is a public accounting firm. They earn revenues by preparing tax returns, performing audit and asset services.

Perpetual Inventory System: The inventory system in which the inventory accounts are updated on each transaction of purchase or sale in inventory. Quantities of inventory are updated on continuous basis. This can be done by integrating the inventory system to order entry and to the retail sale point of system.

To identify: The additional accounts a merchandising company would use in comparing its accounts with that of a service company.