A Firms' Operating Cycle Measures

question 81

Multiple Choice

A firms' operating cycle measures

• A) the time that elapses from the firm's receipt of raw materials until it pays for those materials.
• B) the time that elapses from the payment of raw materials until the firm is paid for its finished product.
• C) the time that elapses from the firm's receipt of raw materials to begin production to its collection of cash from the sale of the finished product.
• D) none of the above.

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Definitions:

Direct Method

A method of reporting cash flows from operating activities by showing the actual cash receipts and payments from operations.

Operating Activities

The primary revenue-generating activities of a business, including the production, distribution, and sale of goods and services, as reported in the cash flow statement.

Statement of Comprehensive Income

A financial statement that includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.

Extraordinary Gains

Unusual and infrequent gains recognized in a company's financial statements, separate from regular business operations.