If a Firm Only Accepts Cash for the Purchase of Its

question 211

Multiple Choice

If a firm only accepts cash for the purchase of its products, what effect would this have on the operating and cash cycles?

• A)The operating and cash cycles would be equal.
• B)The operating and cash cycles would decrease relative to offering credit to customers.
• C)Only the cash cycle would decrease relative to offering credit to customers.
• D)Only the operating cycle would increase relative to offering credit to customers.

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Definitions:

Underfunded

A term referring to insufficient funding to meet future obligations or commitments.

Funding Requirements

The total amount of capital needed to support a business's operations, projects, or to fulfill other financial commitments.

Actuarial Assumptions

The hypotheses about demographic, financial, and other variables that actuaries use to calculate the liabilities and expenses of insurance and pension plans.

GAAP Standards

Generally Accepted Accounting Principles; a set of rules and standards used for financial reporting and accounting in the United States.