Question

Which activities are part of the operating cycle? (Check all that apply.) -Buying property plant and equipment -Buying goods and services -Issuing new shares - Paying cash to suppliers -Collecting cash from customers.

Answer 1

The operating cycle includes buying goods and services, paying cash to suppliers, and collecting cash from customers. It focuses on the day-to-day revenue-generating activities of a business and does not include property purchase or share issuing.

Step-by-step explanation:

The activities that are part of the operating cycle of a business include Buying goods and services, Paying cash to suppliers, and Collecting cash from customers. Activities like Buying property, plant, and equipment and Issuing new shares are more related to investing and financing activities, not the operating cycle.

The operating cycle encapsulates the process where a business purchases goods and services necessary for its operation, pays suppliers for those goods and services, and then sells its products or services to collect cash from customers. This cycle is critical as it reflects the primary day-to-day activities that generate revenue for the business. By contrast, buying property, plants, and equipment usually falls under capital expenditures and long-term investments, which are part of investing activities, not the operating cycle. Similarly, issuing new shares is concerned with raising capital and falls under financing activities.