types of businesses acording to activities

• Service companies generate income by providing services for a fee
• Examples of service companies include barber shops, salons, massage therapies, spas, traveling tourist agencies, IT solutions firms, legal services, and accounting services
• Merchandising involves buying and selling goods
• Examples of merchandising businesses include grocery stores and fashion boutiques
• Manufacturing companies purchase raw materials and process them into finished goods to be sold to customers
• Examples of manufacturing companies include ice-cream manufacturing companies and car manufacturing companies
• Integration of the three types of businesses:

  • A music production and recording company handles singers who perform at concerts (service)
  • The company operates a record bar selling CDs (merchandising)
  • The company produces CD albums of the latest songs (manufacturing)
• Income measurement:

  • In service companies, service revenue minus operating expenses equals net income
  • In merchandising and manufacturing, sales revenue minus cost of goods sold equals gross profit, which is then deducted from operating expenses to calculate net income
• Example problems:

  1. Barbershop earned 60,000 pesos in April, with expenses of 31,000 pesos, resulting in a net income of 29,000 pesos

  2. Grocery store earned 225,000 pesos in April, with cost of goods sold at 160,000 pesos and operating expenses of 35,000 pesos, resulting in a net income of 65,000 pesos

  3. Car manufacturing company sold two cars totaling 3 million pesos in April, with production costs of 1.5 million pesos and operating expenses of 80,000 pesos, resulting in a net income of 1,420,000 pesos