The Operating Cycle of a Company

question 106

Multiple Choice

The operating cycle of a company:

• A)Must be less than one year.
• B)Is usually greater than one year.
• C)Is the time it takes to purchase inventory,sell inventory,and collect cash from the sale.
• D)Is the time it takes to acquire a loan,pay the interest,and retire the loan by paying the creditor in full.

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Definitions:

Materials Price Variance

The difference between the actual cost of materials used in production and the standard cost expected for those materials.

Raw Materials

These are the base ingredients or components that companies use in the production of goods.

Materials Price Variance

The difference between the actual cost of materials used in production and the standard cost of those materials.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the standard quantity expected, multiplied by the standard cost per unit of material.