A Firm with an Inventory Period of 30 Days, an Accounts

question 91

Multiple Choice

A firm with an inventory period of 30 days, an accounts receivable period of 30 days, and an accounts payable period of 90 days has a cash conversion cycle of _____ days.

• A) 150
• B) -60
• C) 30
• D) -30

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Definitions:

Sales

The total amount earned from selling goods or services before any costs or expenses are deducted.

Trade Discount

A reduction in the listed price of goods or services offered by sellers to buyers in the business-to-business market, often determined by quantity purchased or early payment.

Inventory Account

An account in the general ledger that tracks the value of items a company holds for sale in the ordinary course of business.

Catalog List Price

The advertised price of goods or services in a catalog before any discounts, rebates, or special offers are applied.