Accounting Knowledge Transfer Resources Website icon Accounting Knowledge Transfer Scoring Guide. Website icon APA Style and Formatting. Website icon Writing Feedback Tool. This assignment will familiarize you with income statements for service and merchandising organizations. After completing this assignment, you will understand: The differences and similarities between income statements for service and merchandising organizations The methods used to determine the amount of merchandise inventory on hand The preparation of a classified income statement How to use the gross margin percentage as a tool for financial analysis Instructions Respond to the following questions or problems using grammatically correct language and appropriate APA citations. To achieve a proficient grade in this assignment, answer the proficient-level queries for each question. To achieve a distinguished grade, answer both sets of queries for each question. Question 1: Proficient: Describe the major differences between income statements for a service company and a merchandise company. Distinguished: In detail, describe how the gross margin for a merchandising company is determined. Question 2: Proficient: As part of the calculation for cost of goods sold it is necessary to determine the value of goods on hand, termed merchandise inventory. Accountants use two basic methods for determining the amount of merchandise inventory. Identify the two methods and describe the circumstances (including examples of users of each method) under which each method would be used. Distinguished: Describe the computation necessary to arrive at the cost of goods sold figure on a merchandising company's income statement. Question 3: Proficient: Contrast an unclassified income statement with the components of a classified income statement. Explain why a company would choose to present its income statement data in a classified format. Identify and describe the major sections of a classified income statement Distinguished: In each of the following equations supply the missing term(s): Net sales = Gross sales - (______________________ + Sales returns and allowances). Cost of goods sold = Beginning inventory + Net cost of purchases - ________ ________. Gross margin = ________ ________ - Cost of goods sold. Income from operations = __________ _________ - Operating expenses. Net income = Income from operations + _________ ________ - ________ ________. Question 4: Proficient: What is gross margin? How is it calculated? Why might management be interested in the use of the tool for analyzing accounting information? Distinguished: Using a bit of research, which industry presents a notoriously low gross margin percentage, and conversely, name an industry that traditionally experiences a high gross margin percentage. Write your responses in a Microsoft Word document and submit it as an attachment in the assignment area. Prior to submitting your assignment, review the Accounting Knowledge Transfer Scoring Guide to ensure you have met all of the requirements and as a self-assessment of your work. Be sure to address the questions at the proficient and distinguished levels to achieve the highest grade possible. Note: Your instructor may also use the Writing Feedback Tool to provide feedback on your writing. In the tool, click the linked resources for helpful writing information. Please be more attentive towards distinguish level