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Concept explainers
Concept Introduction:
Operating cycle:
Operating cycle is the chain of business activities performed in an organization. An organization can be manufacturing, servicing of merchandising type. For a merchandiser, the main business activities are the purchase, payment to the supplier, sales, and receipts from the customer. Hence the operating cycle of a merchandiser is limited as compared with the operating cycle of a manufacturer.
The Operating cycle mainly includes following activities:
-Purchases from the supplier (either cash or on account)
-Payment to suppliers
-Inventory
-Sales (either cash or on account)
-Collection from customer
The formula to calculate the operating cycle is as follows:
Net Operating Cycle = Inventory Period +
To Indicate:
Any other reason for the difference in the prices of given stores.
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Chapter 4 Solutions
Cornerstones of Financial Accounting
- The Wazoo Company reported an $11,200 liability in its 2023 balance sheet for subscription revenue received in advance. During 2024, $62,000 was received from customers for subscriptions and the 2024 income statement reported subscription revenue of $63,700. What is the liability amount for deferred subscription revenue that will appear in the 2024 balance sheet?arrow_forwardWe can state the accounting equation for a corporation as:arrow_forwardprovide correct answer mearrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningFinancial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage LearningPrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
- Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
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