The Length of Time That Elapses Between the Day at Item

question 76

Multiple Choice

The length of time that elapses between the day at item of inventory is purchased and the day that item sells is called the:

• A) operating cycle.
• B) inventory period.
• C) accounts receivable period.
• D) accounts payable period.
• E) cash cycle.

---

Definitions:

Overhead Costs

Expenses related to the operation of a business that cannot be directly attributed to a specific product or service, such as rent, utilities, and administration expenses.

Activity Rate

The predetermined overhead rate used in activity-based costing to allocate costs to products or services based on specific activities.

Activity-based Costing

A costing method that assigns costs to products or services based on the activities they require.

First-stage Allocation

The initial process of assigning overhead costs to different departments or cost centers in a business based on relevant criteria.