Which of the following statements regarding the operating cycle of a merchandising company is not true?
A)The operating cycle begins with the purchase of merchandise.
B)The operating cycle is shortened by credit sales.
C)The operating cycle ends with the collection of cash from the sale of merchandise.
D)The operating cycle can vary in length among different merchandising companies.
E)The operating cycle sometimes involves accounts receivable.

Question

Quizplus · Accepted Answer

Credit sales actually lengthen the operating cycle, as the company has to wait for the collection of accounts receivable before the cycle can be completed. Therefore, statement B is not true.

Which of the Following Statements Regarding the Operating Cycle of a Merchandising