The operating-cycle concept is used to justify that the net amounts of Construction in Progress and Partial Billings be included as current assets or current liabilities.

Question

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The operating-cycle concept states that the time it takes to acquire inventory, produce goods, sell them, and collect payment is considered the operating cycle of a business. Construction in Progress and Partial Billings are part of this cycle and are considered current assets or liabilities depending on where they fall in the cycle. Therefore, the operating-cycle concept justifies including them as current assets or liabilities.

The Operating-Cycle Concept Is Used to Justify That the Net