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The time that elapses between the purchase of raw materials and the collection of cash for sales is referred to as:
- a)Production cycle
- b)Operating cycle
- c)Cash cycle
- d)Organisation cycle
Correct answer is option 'B'. Can you explain this answer?
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The time that elapses between the purchase of raw materials and the co...
The operating cycle refers to the time it takes for a company to convert its inventory into cash through the sale of goods or services. It includes the time it takes to purchase raw materials, manufacture or produce the goods, sell them, and collect cash from customers.
The operating cycle consists of two main components: the inventory conversion period and the accounts receivable collection period. The inventory conversion period is the time it takes for a company to convert its raw materials into finished goods and then sell them. The accounts receivable collection period is the time it takes for the company to collect cash from its customers after the sale.
Therefore, the operating cycle represents the time that elapses between the purchase of raw materials and the collection of cash for sales.
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The time that elapses between the purchase of raw materials and the co...
The operating cycle refers to the time it takes for a company to convert its inventory into cash through the sale of goods or services. It includes the time it takes to purchase raw materials, manufacture or produce the goods, sell them, and collect cash from customers.
The operating cycle consists of two main components: the inventory conversion period and the accounts receivable collection period. The inventory conversion period is the time it takes for a company to convert its raw materials into finished goods and then sell them. The accounts receivable collection period is the time it takes for the company to collect cash from its customers after the sale.
Therefore, the operating cycle represents the time that elapses between the purchase of raw materials and the collection of cash for sales.
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The time that elapses between the purchase of raw materials and the collection of cash for sales is referred to as:a)Production cycleb)Operating cyclec)Cash cycled)Organisation cycleCorrect answer is option 'B'. Can you explain this answer?
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