Louie Corporation Has Provided the Following Data The Company's Operating Cycle for Year 2 Is Closest To

question 143

Multiple Choice

Louie Corporation has provided the following data: $\begin{array} { l r l } & { \text { Year 2 } } & \text { Year 1 } \\\text { Accounts receivable} & \$ 269,000 & \$ 290,000 \\\text { Inventory } & \$ 190,000 & \$ 160,000 \\\text { Sales, on account }& \$ 1,340,000 & \\\text { Cost of goods sold } & \$ 860,000 &\end{array}$ The company's operating cycle for Year 2 is closest to:

• A)81.0 days
• B)150.5 days
• C)79.2 days
• D)9.7 days

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Definitions:

Comprehensive Tax Allocation

A method of accounting that allows for the recognition of deferred tax liabilities and assets for future tax consequences of events that have been recognized in a business's financial statements or tax returns.

Deferred Method

A method of accounting where certain revenues or expenses are not recognized in the period they occur but are deferred to a later period.

Asset/Liability Method

An accounting technique used for measuring the deferred tax liabilities and assets by considering the temporary differences between the accounting and tax values of assets and liabilities.