The operating cycle of a business is best defined as which of the following?
A) one year
B) the length of time over which our plant and equipment assets are expected to be used by the company in generating revenues
C) the time it takes for a company to purchase and pay for goods or services from suppliers, sell those goods or services to customers and collect cash from the customers
D) the period of time for which we prepare our financial statements

Question

Quizplus · Accepted Answer

The operating cycle of a business refers to the time it takes for a company to purchase goods or services from suppliers, sell those goods or services to customers, and collect cash from customers. This cycle is essential to understanding a company's cash flow and liquidity. It is not necessarily tied to a specific time period, such as a year or the lifespan of assets.

The Operating Cycle of a Business Is Best Defined as Which