Asked by anita raymond on May 05, 2024
Verified
Which one of the following sentences is correct about a manufacturing firm with seasonal sales?
A) The cash flows for the fixed expenses tend to remain relatively stable from one quarter to the next.
B) Purchases of raw materials are normally paid for at the time of purchase.
C) The primary suppliers to the firm are normally paid 30 days prior to supplying their goods to the firm.
D) Capital expenditures tend to be relatively constant throughout the course of a year.
E) The total cash disbursements tend to be relatively constant each quarter even though the cash collections vary considerably.
Cash Flows
The combined total of cash inflows and outflows in a business, essentially affecting its capacity to meet short-term obligations.
Seasonal Sales
Sales fluctuations that occur at certain times of the year, often due to changes in weather, holidays, or other seasonal factors.
Cash Disbursements
The outflow of cash to pay expenses, purchase assets, or repay debts.
- Explain the concept of the operating cycle and its components.
- Implement insights on short-term financial practices within actual case studies.
Verified Answer
AS
Anias SaundersMay 09, 2024
Final Answer :
A
Explanation :
Fixed expenses, such as rent, salaries, and insurance, do not typically fluctuate with sales volume, so they tend to remain relatively stable from one quarter to the next, even in businesses with seasonal sales patterns.
Learning Objectives
- Explain the concept of the operating cycle and its components.
- Implement insights on short-term financial practices within actual case studies.