E$5-1$B Mrs$.$ Stephens has prepared the following list of statements about service compa$-$

nies and merchandisers.

Measuring net income for a merchandiser is conceptually different from measuring

net income for a service company.

For a merchandiser, sales less cost of goods sold is called gross profit.

For a merchandiser, the primary source of revenues is the sale of services.

Interest is an example of an operating expense.

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

In a perpetual inventory system, detailed inventory records of goods on hand are

maintained.

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

the accounting period.

A periodic inventory system provides better control over inventories than a perpetual

system.

Instructions

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