Question

How is the operating cycle defined in the context of balance sheet preparation?

a.

The time between acquiring assets and their realization in cash or cash equivalents.

b.

The time between settling current liabilities and acquiring non-current assets.

c.

The time between the reporting date and the next fiscal year.

d.

The time between the acquisition of assets and their sale in the normal operating cycle.

Posted under IC 89 Management Accounting

Answer: (a).The time between acquiring assets and their realization in cash or cash equivalents. Explanation:The operating cycle is defined as the time between the acquisition of assets for processing and their realization in cash or cash equivalents.

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Q. How is the operating cycle defined in the context of balance sheet preparation?
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