List,and Briefly Discuss,two Differences Between the Income Statement of a Service

question 7

Essay

List,and briefly discuss,two differences between the income statement of a service company and the income statement of a merchandise company.

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Definitions:

Interest Revenue

Earnings generated from lending money or through investments in interest-bearing financial instruments.

Income Tax Expense

The cost of income taxes a company incurs, reflecting the taxes to be paid to taxation authorities and adjustments to deferred tax assets or liabilities.

Deferred Tax Assets

The amount of income tax recoverable in future reporting periods in respect of deductible temporary differences and tax losses.

Retained Earnings

The portion of net income that is retained by a company rather than distributed to its shareholders as dividends, which is reinvested into business operations.