Table 24-11

question 111

Multiple Choice

Table 24-11. Megan's salary for three consecutive years, along with other values, is presented in the table below.
-Refer to Table 24-11. Suppose the consumer price index for 2013 is not necessarily 235. Then Megan's 2013 salary represents more purchasing power than her 2011 salary as long as the consumer price index for 2013 is

• A)greater than 264.25.
• B)less than 264.25.
• C)greater than 258.71.
• D)less than 258.71.

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Definitions:

Liberal Accounts Receivable Policy

A policy that involves offering lenient credit terms to customers, such as extended periods before payment is due, which can encourage sales but may increase the risk of bad debts.

Operating Cycle

The period it takes for a business to buy inventory, sell products, and collect cash from sales, reflecting the efficiency of a company’s operations.

Inventory Period

The average number of days that a company holds its inventory before selling it, indicating the efficiency of its inventory management.

Accounts Receivable Period

The average number of days it takes for a business to receive payments from its customers for goods or services sold on credit.