Which One of the Following Statements Is Correct Concerning the Cash

question 108

Multiple Choice

Which one of the following statements is correct concerning the cash cycle?

• A)A positive cash cycle is preferable to a negative cash cycle.
• B)Increasing the accounts payable period increases the cash cycle.
• C)The longer the cash cycle, the more likely a firm will need external financing.
• D)The cash cycle can exceed the operating cycle if the payables period is equal to zero.
• E)Adopting a more liberal accounts receivable policy will tend to decrease the cash cycle.

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Definitions:

AMT Adjustment

Adjustments and preferences added back to or subtracted from taxable income to calculate the Alternative Minimum Tax.

Market Value

The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently, and without compulsion.

AMTI

Alternative Minimum Taxable Income, calculated by adjusting the regular taxable income with specific preference items and adjustments.

Exemption Amount

A specific dollar amount that taxpayers can claim for themselves and their dependents to reduce taxable income before computing the income tax owed.