A Firm Has an Operating Cycle of 120 Days, an Average

question 166

Multiple Choice

A firm has an operating cycle of 120 days, an average collection period of 40 days, and an average payment period of 30 days. The firm's average age of inventory is ________ days.

• A) 80
• B) 50
• C) 90
• D) 70

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Definitions:

Assignor

In a contract, the party who transfers his or her rights to a contract to a third party (an assignee), giving the assignee the right to collect what was contractually agreed on in the original contract.

Needed Repairs

Needed repairs refer to maintenance or fixings that are necessary to restore or improve the condition of an item, property, or infrastructure to a satisfactory level.

Lease Termination

The act of ending a lease agreement before its specified closing date, by either the landlord or tenant, under terms specified in the agreement.

Wet Floor

A surface where liquids have been spilled or cleaned, representing a slip hazard and commonly marked by warning signs to prevent accidents.