Assuming an Entity Sells Inventory Only on Credit Terms,use the Following

question 52

Multiple Choice

Assuming an entity sells inventory only on credit terms,use the following information to calculate the length of the entity's activity cycle and cash cycle.
Days inventory is 60 days.
Days debtors is 35 days.
Days creditors is 30 days.

• A) Activity cycle is 95 days; cash cycle is 65 days.
• B) Activity cycle is 65 days; cash cycle is 95 days.
• C) Activity cycle is 65 days; cash cycle is 30 days.
• D) Activity cycle is 95 days; cash cycle is 30 days.

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Definitions:

Common Information Effect

This refers to the tendency for group members to spend more time and energy discussing information that all members are already familiar with, rather than focusing on unique information held by individual members.

Build Trust

Developing reliable, truth-based relationships between individuals or groups through consistent actions, communications, and demonstrated integrity.

Representational Gap

The discrepancy between the intended message or representation and how it is perceived or interpreted by others, often leading to misunderstandings or communication breakdowns.

Mental Models

Internal representations of external reality that people use to understand and interact with the world around them.