Which One of the Following Statements Related to the Inventory

question 10

Multiple Choice

Which one of the following statements related to the inventory period is correct?

• A)The inventory period increases as the inventory turnover rate increases.
• B)The length of the inventory period depends on the length of the cash cycle.
• C)The inventory period is the average number of days a firm holds inventory on its shelves.
• D)The inventory period is equal to the operating cycle minus the accounts payable period.
• E)The inventory period has no effect on the cash cycle.

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Definitions:

Unit Sales

The total quantity of items sold by a business within a specific period.

Cash Sales

Transactions in which goods or services are paid for at the time of sale with cash or its equivalent, without credit.

Credit Sales

Sales made on credit, allowing customers to purchase goods or services immediately and pay for them at a later date.

Accounts Receivable

Amounts owed to a business by its customers from sales or services provided on credit.