Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Financial Statements of a Company

Question:
If the Operating Cycle can not be identified, how many months are assumed to be a period of the operating cycle?
Options:
9 months
10 months
11 months
12 months
Correct Answer:
12 months
Explanation:
Operating cycle is the time between the acquisition of assets for processing and their realisation into cash and cash equivalents. Where the operating cycle cannot be identified it is assumed to be of 12 months.