Which One of the Following Statements Is Correct

question 68

Multiple Choice

Which one of the following statements is correct?

• A)If a firm decreases its inventory period, its accounts receivable period will also decrease.
• B)The longer the cash cycle, the more cash a firm typically has available to invest.
• C)A firm would prefer a negative cash cycle over a positive cash cycle.
• D)Decreasing the inventory period will also decrease the payables period.
• E)Both the operating cycle and the cash cycle must be positive values.

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Definitions:

Product Costing

The method used to assign costs to a product, including direct materials, direct labor, and overhead expenses.

Cost Driver

An activity or factor that incurs costs based on its level of use or consumption, influencing the total cost of production.

Activity Level

A measure of the volume or quantity of production or operations in a business, which can significantly impact costs.

Job Order Cost

The total cost associated with a specific job order, including direct materials, direct labor, and allocated manufacturing overhead.