The Cash Conversion Cycle Measures the Time

question 70

Multiple Choice

The cash conversion cycle measures the time:

• A)between the creation of receivables and their collection.
• B)it takes for inventory to be turned into product and sold.
• C)between payment for inventory and collection of cash for its subsequent sale as product.
• D)for a check to clear the banking system.

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Definitions:

Australian Accounting Standards

Rules and guidelines set by the Australian Accounting Standards Board (AASB) that govern how financial reporting is conducted in Australia.

IASB

Stands for International Accounting Standards Board, responsible for developing International Financial Reporting Standards (IFRS).

Economic Benefits

The gains received or receivable by an entity as a result of past or future transactions or events.

Asset

A present economic resource controlled by the entity as a result of past events. An economic resource is a right that has the potential to produce economic benefits.