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:

Repriced Option

An adjusted stock option whose original terms have been modified, typically to reset the option's exercise price.

Share-based Payment

Transactions in which an entity receives goods or services as consideration for its equity instruments or by incurring liabilities for amounts based on the price of the entity's shares.

AASB 2

The Australian Accounting Standards Board standard that specifies the financial reporting requirements for entities dealing with share-based payment transactions.

Incremental Fair Value

The additional value that is estimated to arise from a particular transaction or event over the current fair value of an asset or liability.