A service company sells what it does. A sells what it buys — usually for more than it paid.
Buys from a manufacturer, sells to another merchandiser.
Buys from a wholesaler or manufacturer, sells to the final customer.
A merchandiser's runs from cash, to on the shelf, to a sale, back to cash. Every sale needs two entries: revenue at the price charged, and at what the goods cost.
A updates inventory with every purchase and every sale, so the books always show what should be on the shelf. A only finds out at period end, by counting. This chapter uses the perpetual system throughout.