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.

---

Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Revenue

Revenue is the total amount of income generated by the sale of goods or services related to a company's primary operations.

Incremental Cost

The additional cost incurred from producing or purchasing one more unit of a product or service.

Finished Tables

Finished tables are the final output in furniture manufacturing, representing completed products ready for sale.