Which One of the Following Will Increase the Cash Cycle

question 23

Multiple Choice

Which one of the following will increase the cash cycle?

• A)Increasing the cash discounts given to customers who pay their accounts early
• B)Having a larger percentage of customers paying with cash instead of credit
• C)Paying your suppliers earlier to receive the discount they offer
• D)Buying less raw materials to have on hand
• E)Ordering raw materials inventory only when you need it rather than ahead of time

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Definitions:

Activity Changes

Refers to adjustments or variations in the level of operations or processes within an organization, often impacting costs and productivity.

Variable To Fixed Costs

The process of converting costs that vary with production volumes into costs that remain constant regardless of volume.

Direct Labor

Workers or employees who are directly involved in the production of goods or services, whose labor can be easily traced to the product.

Committed Fixed Costs

Long-term fixed costs that cannot be easily altered in the short term, such as leases, depreciation on equipment, and salaries of permanent employees.