The time between the acquisition of assets for processing and their realisation into cash or cash equivalents is known as the:
A) acquisition cycle.
B) payment cycle.
C) operating cycle.
D) realisation cycle.

Question

Quizplus · Accepted Answer

The operating cycle is the time it takes to transform inventory into cash or cash equivalents. It encompasses the acquisition of assets for processing, the production process, the sale of the finished goods, and the collection of payment from customers. The payment cycle refers to the time it takes to pay suppliers for inventory, while the acquisition cycle refers to the process of acquiring goods and services from suppliers. The realisation cycle is not a commonly used term in accounting or finance.

The Time Between the Acquisition of Assets for Processing and Their