Operating Cycle and Nature of Transaction in Merchandising Business
Learning Objectives: Describes the nature of transactions in a merchandising business What is Merchandizing Business? A merchandising business is a commercial entity that purchases goods, often from manufacturers or wholesalers, and then sells them directly to consumers. Buying and Selling is the core activity of a merchandising business is to buy products at a wholesale price and sell them at a retail price to customers Operating Cycle of a Merchandising Business The operating cycle of a merchandising business involves several key steps that describe the flow of goods and cash within the business: Purchase of Goods for Resale: The cycle begins with the purchase of inventory (goods) from suppliers or vendors. These goods are intended for resale to customers. The business acquires the inventory either for cash or on credit. Sale of Goods: Cash Sales: If the business sells the goods for cash, the cycle proceeds directly from the sale to the next step. Sales on Account (Credit ...
