Which One of the Following Is the Length of Time

question 86

Multiple Choice

Which one of the following is the length of time that a retailer owes its supplier for an inventory purchase?

• A)Inventory period
• B)Accounts receivable period
• C)Accounts payable period
• D)Operating cycle
• E)Cash cycle

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Definitions:

Accrual Accounting

Accounting method that records revenues and expenses when they are incurred, regardless of when cash is exchanged.

Cash Basis Accounting

An accounting method recording transactions when cash is received or paid, irrespective of when revenues or expenses were incurred.

Adjusting Entries

End-of-period accounting insertions to correctly allocate revenues and costs to the specific timeframe in which they occurred.

Prepaid Expenses

Prepaid Expenses are future expenses that have been paid in advance and are recorded as assets on a balance sheet until they are realized as an expense.