Which of the Following Statements Is FALSE

question 4

Multiple Choice

Which of the following statements is FALSE?

• A)The main components of net working capital are cash,inventory,receivables,and payables.
• B)The firm's cash cycle is the average length of time between when a firm originally purchases its inventory and when it receives the cash back from selling its product.
• C)Working capital includes the cash that is needed to run the firm on a day-to-day basis.It does not include excess cash,which is cash that is not required to run the business and can be invested at a market rate.
• D)If the firm pays cash for its inventory,the firm's operating cycle is identical to the firm's cash cycle.

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Definitions:

Direct Costs

Direct costs are expenses that can be directly attributed to the production of a specific product or service, such as raw materials and labor costs.

Factory Supplies Expense

The cost associated with supplies used in the production process within a manufacturing facility.

Depreciation Expense-Factory

The portion of a factory's fixed assets' cost allocated as an expense during a fiscal period, due to wear and tear.

Permanent/Temporary

Refers to elements in financial or other records that either remain constant over time (permanent) or exist only for a specific period before being eliminated (temporary).