Essay: Service Oriented Organizations

Sample Essay

The services industry on the other hand is not based on inventories but on providing services. The inventories also cause a difference between manufacturing and retailing businesses as a manufacturing business includes three types of inventories which are raw material, goods in process and finished goods. Retailing business on the other hand only has one class of inventory which is the finished good.

The information presented in financial statements of all the three companies would be different due to changes in inventory. The calculation of cost of goods sold and operating profit would also be different for the three companies due to changes in presentation of information related to inventories. The information related to tangible products are depicted on the balance of manufacturing and retailing companies as assets whereas the information and value of services is not presented in the balance sheet of a service oriented organization (Kinney & Raiborn, 2008).

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