Which of the Following Statements Is True

question 98

Multiple Choice

Which of the following statements is true?

• A) The inventory period of the operating cycle ends when the receivable it creates is actually paid for by the customer.
• B) The length of the operating cycle is always greater than or equal to the length of the cash cycle.
• C) The accounts receivable period is always greater than or equal to the length of the cash cycle.
• D) The inventory period plus the accounts receivable period is equal in length to the operating cycle plus the cash cycle.
• E) The accounts payable period ends when the inventory is sold.

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Definitions:

Fixed Period Cost

Describes expenses that do not fluctuate with the level of production or sales within a certain time frame, such as rent and salaries.

Annual Subscription

A payment model where customers pay a recurring fee once per year for access to a product or service.

Computer Magazine

A publication focusing on computers, technology trends, software and hardware reviews.

Period Cost

Costs that are not directly tied to the production process and are expensed in the period in which they are incurred.