The length of time that elapses between the day at item of inventory is purchased and the day that item sells 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 length of time between purchasing inventory and selling it is known as the inventory period, which is a component of the operating cycle (answer A). The accounts receivable period (answer C) is the length of time it takes to collect payments from customers after a sale has been made, while the accounts payable period (answer D) represents the length of time that a business takes to pay its suppliers for goods or services received. The cash cycle (answer E) is a measure of how quickly a company can convert its inventory and other assets into cash to pay off its liabilities.

The Length of Time That Elapses Between the Day at Item