Question

Two categories of expenses in merchandising companies are a. cost of goods sold and financing expenses. b. operating expenses and financing expenses. c. cost of goods sold and operating expenses. d. sales and cost of goods sold.

Answer 1

Answer:

The correct answer is letter "C": expenses for merchandising companies.

Explanation:

Merchandising companies are those that buy goods from manufacturers or distributors to resell them at a higher price. Retails and Wholesales are examples of merchandising businesses.  

When it comes to expenses reported in their Financial Statements, merchandising companies record Costs of Goods Sold (COGS) which represents what the business paid for the inventory sold and Operating Expenses which are the expenditures incurred as a result of the operations of the company such as sales, advertising, delivery. rent, utilities, and depreciation to mention a few.

Answer 2

Answer:

Two categories of expenses in merchandising companies are c. cost of goods sold and operating expenses

Explanation:

Merchandising Companies will incur direct expenses related to their trading activities in relation to each of their sales and these are known as cost of goods sold. Cost of Goods Sold is an expense in the Trading Account.

However, the Merchandising Company will also incur other indirect expenses to maintain its trading and are not directly related to each sale of their merchandise. For example the cost of Administration Work and Depreciation of its equipment. These  are known as Operating Expenses. Operating Expenses are expenses in the Profit and loss Account