Which of the Following Is TRUE for a Service Company

question 122

Multiple Choice

Which of the following is TRUE for a service company?

• A) Expenses are all period costs.
• B) Expenses are all product costs.
• C) Income statement includes gross profit.
• D) Balance sheet includes finished goods inventory.

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Definitions:

Raw Materials Used

The total cost of materials directly consumed in the production process during a specific period.

Gross Profit

Gross profit is the difference between sales revenue and the cost of goods sold (COGS), showing how efficiently a company produces its products.

Raw Materials Inventory

Stocks of the basic materials and components that are used in production but have not yet been processed or used in the manufacturing process.

Direct Labour

Work specifically conducted by employees directly involved in the manufacturing process of a product.