Bookkeeping for service-based and product-based businesses differs significantly due to the nature of their operations. Service-based businesses focus on providing expertise or labor, meaning their bookkeeping primarily tracks revenue from services rendered, client invoices, and operational expenses. Since they don’t deal with physical inventory, managing cost of goods sold (COGS) is minimal or nonexistent. In contrast, product-based businesses must account for inventory purchases, stock levels, and COGS, making bookkeeping more complex. They need to track purchases, storage costs, and sales while maintaining accurate records for tax and financial reporting. Additionally, product-based businesses often deal with supply chain management, requiring careful reconciliation of supplier invoices and inventory valuation methods like FIFO or LIFO.

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