Their operating cycle begins with cash-on-hand, providing service to customers, and collecting customer payments Their operating cycle begins with cash-on-hand, purchasing inventory, selling merchandise, and collecting customer payments

A purchase discount is an incentive for a retailer to pay their account early. Service companies sell intangible services and do not have inventory.

operating cycle — amount of time it takes a company to use its cash to provide a product or service and collect payment from the customer. purchase discount — an incentive for a retailer to pay their account early. physical inventory count — manual stock check of inventory to make sure what is recorded on the books matches what is actually in the warehouse and on the sales floor. sales discounts — reduction in the selling price offered to customers who pay their account within the discount period; the actual account is a contra revenue account that reduces sales.