notes
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Description
The activities of a service business differ from those of a merchandising business. These differences are reflected in the operating cycles of a service and merchandising business as well as in their financial statements. The operating cycle is the process by which a company spends cash, generates revenues, and receives cash either at the time the revenues are generated or later by collecting an account receivable. The operating cycle of a service and merchandising business differs in that a merchandising business must purchase merchandise for sale to customershe revenue activities of a service business involve providing services to customers. On the income statement for a service business, the revenues from services are reported as fees earned. The operating expenses incurred in...