Jill is the CFO of Summertime Adventures which is a seasonal firm specializing in products related to water sports.The firm purchases inventory one month before it is sold and pays for its purchases 60 days after the invoice date.Sales are highest during July and August.Currently,Jill is preparing the cash disbursements section of the firm's cash budget.Which one of the following statements is supported by this information?

Question

Quizplus · Accepted Answer

Since the firm purchases inventory one month before sales peak and pays for these purchases 60 days after the invoice date, the highest payments to suppliers will occur two months after the inventory is purchased. Given that sales are highest in July and August, inventory for these sales is likely purchased in June and July, leading to the highest payments to suppliers in August and September.

Jill Is the CFO of Summertime Adventures Which Is a Seasonal