which of the following statement regarding the operating cycle of a merchandising company is not true?...
which of the following statement regarding the
operating cycle of a merchandising company is not true?
a) the operating cycle begins with the purchase of
merchandise
b) the operating cycle is shorted by credit sales
c) the operating cycle sometimes accounts receivable
d) the operating cycle ends with the collection of Cash from sales
of merchandise
Homework Answers
The correct option is
- b) the operating cycle is shortened by credit sales
Explanation:
- Operating cycle of a merchandise company is the average time period taken for purchasing of merchandise inventory with initial investment, to sell the merchandise inventory, to receive the cash from customers and collections from recievables.
- The operating cycle begins with purchase of inventory and may end with selling of inventory or collection from recievables.
- But the operating cycle never shortened by credit sales. It remains as it is for both cash sales or credit slaes.
- So all the given statements are true except the option b.
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