The operating cycle:
A)Is repeated once per year for manufacturers and merchandisers.
B)Has seven steps.
C)Starts with using cash to purchase merchandise and ends with collecting the cash back from customers.
D)Is longer for a retailer than for a manufacturer.

Question

Quizplus · Accepted Answer

The operating cycle starts with using cash to purchase merchandise and ends with collecting the cash back from customers. It includes all the activities involved in converting cash to inventory, inventory to accounts receivable, and accounts receivable back to cash. It is not repeated only once per year and could have more than seven steps, depending on the business. It could be longer for a manufacturer than for a retailer, depending on the production and sales cycles.

The Operating Cycle