Which One of the Following Statements Concerning the Cash Cycle

question 42

Multiple Choice

Which one of the following statements concerning the cash cycle is correct?

• A) The cash cycle is equal to the operating cycle minus the inventory period.
• B) A negative cash cycle is actually preferable to a positive cash cycle.
• C) Granting credit to slower paying customers tends to decrease the cash cycle.
• D) The cash cycle plus the accounts receivable period is equal to the operating cycle.
• E) The most desirable cash cycle is the one that equals zero days.

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Definitions:

Cooling Off Rule

A federal regulation allowing consumers to cancel certain types of sales or contracts within three days for a full refund.

Rescind Contract

To rescind a contract means to legally cancel or terminate the agreement, returning the parties to the positions they held before entering into the contract.

Do Not Call Registry

A national list managed by the U.S. government where individuals can register their telephone numbers to restrict unsolicited telemarketing calls.

No Set Expiration Date

A term indicating that a contract or agreement does not have a predetermined end date.