An automobile dealership is a fully integrated business on a relatively small scale. Many dealer- ships sell both new cars and used cars. They also have a service organization that services cars both for customers who buy from them and from other people who have bought their cars else- where. Many dealerships engage in financing operations to facilitate the purchase by their customers. Financing can be either by means of loans from the automobile supplier (e.g., GM, Ford, or Toyota), or by representing a bank on site or through leasing arrangements, either in- house or through a third party.
These operations will have very different costs associated with them, some of which will rep- resent assets and some of which will represent expenses.
Required:
Prepare a list of the types of costs associated with each of these aspects of a car dealership and indicate whether it is a balance sheet item or an income statement item: new car sales, used car sales, auto service, and financing.