The Length of Time Between the Day an Item Is

question 54

Multiple Choice

The length of time between the day an item is purchased from a supplier until the day that supplier is paid for that purchase is called the:

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

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Definitions:

Productive Efficiency

A situation in which a good or service is produced at the lowest possible cost and with the optimal combination of inputs.

Coordination Problem

A challenge faced by individuals or organizations when their interests conflict, requiring them to align their actions or decisions to achieve a common goal.

Incentive Problem

A situation where the incentives or motivations available to individuals or firms do not align with broader economic, social, or organizational goals, potentially leading to suboptimal outcomes.

Central Planning

An economic system where the government makes all decisions about the production and distribution of goods and services, controlling resources and directing activities.