Question

Operating cycle is the time between the acquisition of assets for processing and their realisation into ______.

Options

• Current Assets

• Non-Current Assets

• Other Current Assets

• Cash and Cash Equivalents

Answer 1

Operating cycle is the time between the acquisition of assets for processing and their realisation into cash and cash equivalents.

Explanation:

The operating cycle is defined as the time period between the acquisition of assets for processing (such as raw materials) and their realization in cash or cash equivalents after the sale of finished goods. This cycle includes stages like purchase, production, sale, and collection of receivables, ultimately converting assets back to cash. Thus, the operating cycle ends when the assets are realized into cash or cash equivalents, not other types of assets.