If the Operating Cycle of a Business Is Fifteen Months

question 47

Multiple Choice

If the operating cycle of a business is fifteen months, which of the following statement is true?

• A) Cash set aside for a purchase of equipment will be shown as a current asset.
• B) A note receivable that is due one year and two months from the balance sheet date will be shown as a current asset.
• C) Balance sheets should be prepared more often than income statements.
• D) A note, that is payable by the business two years from the balance sheet date, will be shown as a current liability.

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Definitions:

Discount

A reduction applied to a regular price or rate, often used as an incentive for purchasing goods or services.

Mark-up

The amount added to the cost price of goods to cover overhead and profit; the difference between the cost and selling price.

Retail Prices

The price at which goods and services are sold to the end consumer, inclusive of markup and VAT.

Markdown

A reduction from the original or retail price of goods or services to increase sales or clear inventory.