Which of the following best describes the operating cycle?
A)It is the length of the manufacturing process.
B)It is the time that elapses from the purchase of inventory on account to the sale of inventory on account.
C)It is the time that elapses from the completion of the manufacturing process to the cash collection from sale of the manufactured goods.
D)It is the time that elapses from the cash payment to suppliers to collection of cash from customers.

Question

Quizplus · Accepted Answer

The operating cycle is the period of time that starts with the payment for goods and services (to suppliers) and ends with the collection of cash from customers after the goods or services have been sold. It encompasses the entire process from cash outlay for inventory or raw materials, through the sale of finished goods, to the receipt of cash from customers.

Which of the Following Best Describes the Operating Cycle