The Operating Cycle for a Merchandiser That Sells Only for Cash

question 27

Multiple Choice

The operating cycle for a merchandiser that sells only for cash moves from:

• A) Purchases of merchandise to inventory to cash sales.
• B) Purchases of merchandise to inventory to accounts receivable to cash sales.
• C) Inventory to purchases of merchandise to cash sales.
• D) Accounts receivable to purchases of merchandise to inventory to cash sales.
• E) Accounts receivable to inventory to cash sales.

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Definitions:

Inflation

The tempo at which the prevalent prices for goods and services swell, erasing buying effectiveness.

Annual Interest Rate

The percentage of principal charged by the lender for the use of its money, calculated on an annual basis.

Overall Level of Prices

The overall level of prices refers to the average price of goods and services across the economy at a given time.

Consumer Spending

The total amount spent by consumers on goods and services within a particular period, driving a significant portion of economic activity.