The Following Statements Are True Regarding the Operating Cycle of a Merchandising

question 238

Multiple Choice

The following statements are true regarding the operating cycle of a merchandising company except:

• A) The operating cycle is shortened by credit sales.
• B) The operating cycle ends with the collection of cash from the sale of merchandise.
• C) The operating cycle begins with the purchase of merchandise.
• D) The operating cycle can vary in length among different merchandising companies.
• E) The operating cycle sometimes involves accounts receivable.

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Definitions:

Time Horizon

Describes the length of time over which an investment, project, or policy is evaluated or expected to have an impact.

Income Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in consumers' income, holding all else constant.

Midpoint Method

A technique used in economics to calculate the percentage change between two points by dividing the change by the average of the initial and final values.

Normal Goods

Goods for which demand increases as the income of individuals increases, and vice versa.