Accounting and Its Use in Business Decisions
Types of activities performed by business organizations
The forms of business entities discussed in the previous section are classified according to the type
of ownership of the business entity. Business entities can also be grouped by the type of business
activities they perform - service companies, merchandising companies, and manufacturing companies.
Any of these activities can be performed by companies using any of the three forms of business
organizations.
- Service companies perform services for a fee. This group includes accounting firms, law
firms, and dry cleaning establishments. The early chapters of this text describe accounting for
service companies.
- Merchandising companies purchase goods that are ready for sale and then sell them to customers. Merchandising companies include auto dealerships, clothing stores, and supermarkets.
- Manufacturing companies buy materials, convert them into products, and then sell the
products to other companies or to the final consumers. Manufacturing companies include steel
mills, auto manufacturers, and clothing manufacturers.