Which of the following statements about a company's operating cycle is not true:
a. The operating cycle is the time span from when cash is used to acquire goods and services until cash is received from the sale of goods and services.
b. Most operating cycles are less than one year.
c. Non-current items are those expected to come due within one year or the company's operating cycle.
d. The length of a company's operating cycle depends on its activities.
e. For a merchandiser selling products, the operating cycle is the time span between paying suppliers for merchandise and receiving cash from customers.
What Is An Operating Cycle:
Companies nowadays invest a multitude of resources to streamline their Operating Cycle. The Operating Cycle is the amount of time that occurs between the initial purchase of merchandise from suppliers to when they receive payment from the customer.
Answer and Explanation:
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fromChapter 22 / Lesson 42
An operating cycle consists of lead time, production time, sales time, delivery time, and cash-collection time. Learn the definitions of the parts of the operating cycle, how long the operation cycles are for different industries, and the formula used for calculating the operating cycle in accounting.