A company's operating cycle may be described as
A)the period of time that is typically required for a company to convert cash into inventory and inventory into cash.
B)the period of time from the beginning of operations until a company liquidates all of its assets.
C)always a one-year time period.
D)a cycle that is distinguished at the discretion of the Board of Directors on a daily basis.

Question

Quizplus · Accepted Answer

An operating cycle refers to the time it takes for a company to convert cash into inventory and inventory back into cash. This cycle can vary depending on the industry and the specific company, but it usually represents the time it takes for a company to complete its regular business operations. It can be a shorter or longer period than one year, and the Board of Directors do not typically have a role in defining or determining the operating cycle.

A Company's Operating Cycle May Be Described as