The self-liquidating cycle is the movement from cash to inventories to receivables and back to cash.

Question

Quizplus · Accepted Answer

The self-liquidating cycle is a process in which a company uses its cash to purchase inventory, sells the inventory to customers on credit, and collects the payments from customers to generate cash. This cycle allows the company to continually replenish its cash reserves and fund its operations without relying on external financing. Therefore, the self-liquidating cycle moves from cash to inventories to receivables and back to cash, making the statement true.

The Self-Liquidating Cycle Is the Movement from Cash to Inventories