Question

The operating cycle begins when a firm:_________.

1. uses its cash to purchase raw materials and ends when the firm collects cash payments on its credit sales.
2. cannot be measured without knowing the days' payables outstanding.
3. does not end with the finished goods being sold to customers and the cash collected on the sales; but when you take into account the time taken by the firm to pay for its purchases.
4. receives the raw materials that would be used to produce the goods that the firm manufactures.

Answer 1

Answer:Option A

Step-by-step explanation:

The operating cycle is the average period of time required for a business to make an initial outlay of cash to produce goods, sell the goods, and receive cash from customers in exchange for the goods sold. It is useful for estimating the amount of working capital that a company will need in order to maintain or expand its business.

The rest of the options buttress the operating cycle but the question wants to identify the beginning which is the start point of the cycle.