Central Supply paid off an accounts payable for a toboggan it had purchased on credit three weeks ago. The time period between today and the day Central Supply will receive cash from the sale of this toboggan is called the:
A) operating cycle.
B) inventory period.
C) accounts receivable period.
D) accounts payable period.
E) cash cycle.

Question

Quizplus · Accepted Answer

The time period between paying off an accounts payable and receiving cash from the sale of an item is called the cash cycle. This is because it represents the time it takes for the company to convert its investments (inventory) into cash. Therefore, the correct answer is E.

Central Supply Paid Off an Accounts Payable for a Toboggan