Mr. Etihad has prepared the following list of statements about service companies and merchandisers. 

1. Measuring net income for a merchandiser is conceptually the same as for a service company. 

2. For a merchandising company, sales less operating expenses is called gross profit. 

3. For a merchandising company, the primary source of revenues is the sale of inventory. 

4. Salaries and wages is an example of an operating expense. 

5. The operating cycle of a merchandiser is the same as that of a service company. 

6. In a perpetual inventory system, no detailed inventory records of goods on hand are maintained. 

7. In a periodic inventory system, the cost of goods sold is determined only at the end of the accounting period. 

Instructions 

Identify each statement as true or false. If false, indicate how to correct the statement