The length of the operating cycle is equal to the length of the
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements I and II are correct.
D)Neither statement I nor II is correct.

Question

Quizplus · Accepted Answer

The operating cycle is the time it takes for a company to purchase inventory, sell it, and collect the cash from the sale. The length of the operating cycle is equal to the sum of the inventory conversion period, the accounts receivable collection period, and the accounts payable payment period.Statement I is correct because the inventory conversion period is the time it takes for a company to purchase inventory and sell it. Statement II is correct because the accounts receivable collection period is the time it takes for a company to collect the cash from the sale of inventory.

The Length of the Operating Cycle Is Equal to the Length