Asked by Gursave Singh on Jun 28, 2024
Verified
Which of the following statements 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 shortened by credit sales.
C) The operating cycle ends with the collection of cash from the sale of merchandise.
D) The operating cycle can vary in length among different merchandising companies.
E) The operating cycle sometimes involves accounts receivable.
Operating Cycle
The period it takes for a business to buy inventory, sell products, and generate cash from operations.
Merchandising Company
A business that purchases finished goods for the purpose of resale without further processing.
Credit Sales
Sales made on credit, where payment is received after the goods or services are delivered.
- Comprehend the functioning and variations of the operating cycle in merchandising companies.
Verified Answer
ZK
Zybrea KnightJul 02, 2024
Final Answer :
B
Explanation :
Credit sales actually lengthen the operating cycle, as the company has to wait for the collection of accounts receivable before the cycle can be completed. Therefore, statement B is not true.
Learning Objectives
- Comprehend the functioning and variations of the operating cycle in merchandising companies.