Jax Went to His Accountant and Learned About the Cash

question 30

Multiple Choice

Jax went to his accountant and learned about the cash conversion cycle,defined as ______.

• A)a measure of the number of days it takes to collect on accounts receivable
• B)a measure of the average number of days it takes to sell the entire inventory of a company
• C)a measure of the number of days it takes you to pay your bills
• D)equaling DOI + DSO − DPO

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Definitions:

Petty Cash

A small amount of cash on hand used for covering minor expenses, managed through a petty cash fund.

Money Orders

A financial instrument, purchased for a specific amount of money, that is used for making payments from one party to another.

Internal Control System

Processes and procedures implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

Reliable Accounting

An accounting approach that emphasizes accuracy, verifiability, and impartiality in financial reporting.