For accounting purposes, the operating cycle concept
A) has become obsolete.
B) affects the income statement but not the balance sheet.
C) permits some assets to be classified as current even though they are more than one year removed from becoming cash.
D) causes the distinction between current and noncurrent items to depend on whether they will affect cash within one year.

Question

Quizplus · Accepted Answer

The operating cycle concept allows certain assets to be classified as current assets even if they will be converted into cash in more than one year, based on the length of the company's normal operating cycle. This is because the classification depends on the operating cycle's duration, which can exceed one year for some businesses.

For Accounting Purposes, the Operating Cycle Concept