Operating cycle Operating cycle refers to the average period of time a business takes to purchase inventory, convert it into sales, and then collect revenue from sales, in the form of accounts receivable . In a merchandising company, the primary source of revenue is the sale of merchandise. This is termed as either sales revenue or sales. Unlike expenses for a service-based company, expenses for a merchandising company include cost of goods sold and operating expenses. Cost of goods sold is the total cost of merchandise sold in a period. Operating expenses include selling and advertising expenses. To determine: The reason why the normal operating cycle for a merchandising company is likely to be longer than for a service company.

Question

Want to see the full answer?

Answer 1

Question

Chapter 5, Problem 2Q

To determine

Operating cycle

Operating cycle refers to the average period of time a business takes to purchase inventory, convert it into sales, and then collect revenue from sales, in the form of accounts receivable.

In a merchandising company, the primary source of revenue is the sale of merchandise. This is termed as either sales revenue or sales.

Unlike expenses for a service-based company, expenses for a merchandising company include cost of goods sold and operating expenses. Cost of goods sold is the total cost of merchandise sold in a period. Operating expenses include selling and advertising expenses.

To determine: The reason why the normal operating cycle for a merchandising company is likely to be longer than for a service company.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Correct Answer

On January 1, VK Financial Group lends a corporate client $240,000 at a 9% interest rate. The amount of interest revenue that should be recorded for the quarter ending March 31 equals: a) $21,600 b) $5,400 c) $4,800 d) $1,350

Help

Answer 2

Question

Chapter 5, Problem 2Q

To determine

Operating cycle

Operating cycle refers to the average period of time a business takes to purchase inventory, convert it into sales, and then collect revenue from sales, in the form of accounts receivable.

In a merchandising company, the primary source of revenue is the sale of merchandise. This is termed as either sales revenue or sales.

Unlike expenses for a service-based company, expenses for a merchandising company include cost of goods sold and operating expenses. Cost of goods sold is the total cost of merchandise sold in a period. Operating expenses include selling and advertising expenses.

To determine: The reason why the normal operating cycle for a merchandising company is likely to be longer than for a service company.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 5, Problem 2Q

To determine

Operating cycle

Operating cycle refers to the average period of time a business takes to purchase inventory, convert it into sales, and then collect revenue from sales, in the form of accounts receivable.

In a merchandising company, the primary source of revenue is the sale of merchandise. This is termed as either sales revenue or sales.

Unlike expenses for a service-based company, expenses for a merchandising company include cost of goods sold and operating expenses. Cost of goods sold is the total cost of merchandise sold in a period. Operating expenses include selling and advertising expenses.

To determine: The reason why the normal operating cycle for a merchandising company is likely to be longer than for a service company.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 5, Problem 2Q

To determine

Operating cycle

Operating cycle refers to the average period of time a business takes to purchase inventory, convert it into sales, and then collect revenue from sales, in the form of accounts receivable.

In a merchandising company, the primary source of revenue is the sale of merchandise. This is termed as either sales revenue or sales.

Unlike expenses for a service-based company, expenses for a merchandising company include cost of goods sold and operating expenses. Cost of goods sold is the total cost of merchandise sold in a period. Operating expenses include selling and advertising expenses.

To determine: The reason why the normal operating cycle for a merchandising company is likely to be longer than for a service company.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 5, Problem 2Q

To determine

Operating cycle

Operating cycle refers to the average period of time a business takes to purchase inventory, convert it into sales, and then collect revenue from sales, in the form of accounts receivable.

In a merchandising company, the primary source of revenue is the sale of merchandise. This is termed as either sales revenue or sales.

Unlike expenses for a service-based company, expenses for a merchandising company include cost of goods sold and operating expenses. Cost of goods sold is the total cost of merchandise sold in a period. Operating expenses include selling and advertising expenses.

To determine: The reason why the normal operating cycle for a merchandising company is likely to be longer than for a service company.

Answer 6

Chapter 5, Problem 2Q

To determine

Operating cycle

Operating cycle refers to the average period of time a business takes to purchase inventory, convert it into sales, and then collect revenue from sales, in the form of accounts receivable.

In a merchandising company, the primary source of revenue is the sale of merchandise. This is termed as either sales revenue or sales.

Unlike expenses for a service-based company, expenses for a merchandising company include cost of goods sold and operating expenses. Cost of goods sold is the total cost of merchandise sold in a period. Operating expenses include selling and advertising expenses.

To determine: The reason why the normal operating cycle for a merchandising company is likely to be longer than for a service company.

Answer 7

Chapter 5, Problem 2Q

To determine

Operating cycle

Operating cycle refers to the average period of time a business takes to purchase inventory, convert it into sales, and then collect revenue from sales, in the form of accounts receivable.

In a merchandising company, the primary source of revenue is the sale of merchandise. This is termed as either sales revenue or sales.

Unlike expenses for a service-based company, expenses for a merchandising company include cost of goods sold and operating expenses. Cost of goods sold is the total cost of merchandise sold in a period. Operating expenses include selling and advertising expenses.

To determine: The reason why the normal operating cycle for a merchandising company is likely to be longer than for a service company.

Answer 8

Expert Solution & Answer

Answer 9

Expert Solution & Answer

Answer 10

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 11

Ch. 5 - Prob. 1Q Ch. 5 - Prob. 2Q Ch. 5 - Prob. 3Q Ch. 5 - Prob. 4Q Ch. 5 - 5. When is cost of goods sold determined in a...Ch. 5 - Prob. 6Q Ch. 5 - Prob. 7Q Ch. 5 - Prob. 8Q Ch. 5 - Prob. 9Q Ch. 5 - Prob. 10Q

Want to see the full answer?

Chapter 5 Solutions