Which One of the Following Equals the Operating Cycle

question 40

Multiple Choice

Which one of the following equals the operating cycle?

• A)cash cycle plus accounts receivable period
• B)inventory period plus the accounts receivable period
• C)inventory period plus the accounts payable period
• D)accounts payable period minus the cash cycle
• E)accounts payable period plus the accounts receivable period

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Definitions:

Cash Equivalents

Short-term, highly liquid investments that are easily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Quick Ratio

A measure of a company's ability to meet its short-term obligations using its most liquid assets.

Accounts Receivable

Accounts receivable represents the money owed to a company by its customers for goods or services that have been delivered but not yet paid for, essentially an extension of credit from the company to the customer.

Accounts Payable

The amount of money owed by a company to its suppliers or creditors for goods and services purchased on credit.