Final answer:
True. Operating expenses are shown on the income statement of both merchandising and service companies.
Step-by-step explanation:
True. In both merchandising and service companies, operating expenses are shown on the income statement. Operating expenses represent the costs incurred in the day-to-day operations of a business.
For merchandising companies, operating expenses include items such as rent, utilities, salaries, advertising costs, and depreciation of assets used in the business. These expenses are necessary to support the buying, selling, and storing of merchandise.
Similarly, for service companies, operating expenses include costs such as rent, salaries, advertising, insurance, and office supplies. These expenses are necessary to support the delivery of services to customers.