The Time It Takes Between When Materials Are Ordered and Cash

question 145

Multiple Choice

The time it takes between when materials are ordered and cash is collected from receivables is referred to as the:

• A) operating cycle
• B) cash conversion cycle
• C) assets turnover cycle
• D) sales or revenues cycle

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Definitions:

Physical Flow

The actual movement of goods or materials through a manufacturing process, from receipt of raw materials to delivery of finished products.

Weighted Average Method

An inventory valuation method that applies a weighted average cost to the goods available for sale, to calculate cost of goods sold and ending inventory.

Responsibility Centre

A management accounting tool in which parts of an organization are allocated responsibility for controlling costs, revenues, or investments.

Control Purposes

Activities or measures implemented to ensure that operations are conducted as planned and resources are used efficiently.