A Firm Has an Average Age of Inventory of 60

question 98

Multiple Choice

A firm has an average age of inventory of 60 days, an average collection period of 45 days, and an average payment period of 30 days. The firm's operating cycle is ________ days.

• A) 75
• B) 105
• C) 90
• D) 135

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Definitions:

Liable

Being legally responsible or obligated.

Sarbanes-Oxley Act

A U.S. federal law that aims to protect investors by making corporate disclosures more reliable and accurate, enhancing financial transparency and accountability.

Audit Committee

A subcommittee of a company's board of directors responsible for overseeing financial reporting, audit processes, and compliance with laws and regulations.

Public Accounting Firm

A business organization that provides auditing, tax, consulting, and financial advisory services to clients.