Asked by Rayna Kordonowy on Jul 21, 2024
Verified
Current assets are cash or other assets that are reasonably expected to be converted into cash, sold, or consumed within one year or a normal operating cycle.An operating cycle is defined as the company's ability to
A) spend cash to payoff the company's liabilities
B) spend cash to acquire inventory, which is sold and returned to cash
C) spend cash to acquire inventory, which is sold to customers in the normal course of business
D) spend cash in the generation of services, which can result in an increase in revenue and net income from operations
Operating Cycle
The time period it takes for a company to purchase inventory, sell products, and convert sales into cash.
Current Assets
Assets that a company expects to convert into cash, sell, or consume within one year or the operating cycle, whichever is longer.
Net Income
Calculated as revenue minus the cost of goods sold, operating expenses, and taxes, representing the company's earnings.
- Comprehend the definition and components of current assets and the operating cycle.
Verified Answer
Learning Objectives
- Comprehend the definition and components of current assets and the operating cycle.
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