The ________ of a Firm Is the Amount of Time

question 332

Multiple Choice

The ________ of a firm is the amount of time that elapses from the point when the firm makes an outlay to purchase raw materials to the point when cash is collected from the sale of the finished good.

• A) cash turnover
• B) cash conversion cycle
• C) average age of inventory
• D) average collection period

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Definitions:

Factory Overhead Costs

Factory overhead costs encompass all indirect costs associated with manufacturing, excluding direct materials and direct labor.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, representing the asset's wear and tear, deterioration, or obsolescence.

Prepaid Insurance

An asset account that represents the amount of insurance premiums that have been paid in advance and that has not yet expired as of the balance sheet date.

Factory Overhead Applied

The allocation of estimated factory overhead costs to individual units of production.