Accounting?

Question

The time span during which cash is used to acquire goods and services, and these goods and services are sold to customers, who in turn pay for their purchases with cash, is called the:
Question 7 answers
operating cycle
cash-to-cash cycle
liquidity cycle
receivables-to-cash cycle

Answer 1

operating cycle
The average time between purchasing or acquiring inventory and receiving cash proceeds from its sale.

Answer 2

This is a bit tricky as the operating cycle is very similar to the cash to cash cycle. The following are some definitions with the sources cited at the links below.

The operating cycle is the length of time for a company to acquire materials, produce the product, sell the product, and collect the proceeds from customers.

Some people tend to think of a typical operating cycle as cash to cash: goods are produced and, when sold, are converted into cash; the cash remaining after subtracting costs incurred is profit. Such an approach, however, fails to show the variety of sources and uses of funds in the operating cycle.

Most companies that produce and sell tangible goods continuously convert cash into inventory, then convert inventory into receivables and ultimately back into cash. This is called the "cash to cash" cycle. Cash-to-Cash Cycle Time: The time it takes for cash to flow back into a company after it has been spent for raw materials.

From the above, you will notice a fine line between op'g cycle and cash to cash cycle. The op'g cycle is the length of time for a company to ACQUIRE materials, produce the product, sell the product, and collect the proceeds from customers. You can acquire materials on cash or credit. However the question makes it clear that the goods and svcs were acquired for cash, not on credit. This points to the answer being the cash to cash cycle, which is a more specific answer. The cash to cash cycle is a subset of the op'g cycle.

Answer 3

point of sale

Answer 4

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